SINGAPORE: Iron ore futures prices hit a two-week high on Monday, buoyed by an improved Chinese economic outlook following strong services data and continued stimulus expectations from the top consumer.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 3.41% higher at 787.5 yuan ($110.22) a metric ton.
It hit an intraday high of 788.5 yuan, its strongest level since July 22.
The benchmark September iron ore on the Singapore Exchange was 1.72% higher at $105.6 a ton, its highest since July 18, as of 0330 GMT.
Growth in China’s services activity accelerated in July, expanding for the 19th straight month, a private-sector survey showed on Monday.
Both the services and manufacturing sectors eased from June but remained in expansionary territory, and employment rose at the fastest pace in 11 months, the survey found.
Meanwhile, China’s State Council on Saturday published a communique to promote the “high-quality development of service consumption”.
Dalian iron ore ticks up
The document listed measures to “boost the vitality” of the country’s consumption, including improving the quality of products and services, and offering financial support for consumption such as tax deductions and credit support.
With domestic demand as one of the bigger drags on China’s economy this year, it is a good sign policies are coming into play to support consumption, though markets may still be hoping for larger scale demand-side supportive policies such as consumption vouchers, said ING analysts in a note.
The steel market is expected to rebound this week, as increased stimulus efforts boosted market confidence last week, said Hexun Futures.
Steel benchmarks on the Shanghai Futures Exchange were stronger. Wire rod climbed nearly 1.7%, hot-rolled coil advanced about 1.4%, rebar gained around 1.2%, and stainless steel added 0.64%.
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