Iron ore price rises amid signs of strong demand in China

Iron ore prices rose on Wednesday amid signs of robust demand in China.
Non-ferrous metal prices rebounded this week as Beijing's success in containing the massive COVID-19 outbreak has bolstered confidence in the outlook for demand.

According to Fastmarkets MB, the 62% Fe benchmark imported into North China changed hands at $ 148.66 a tonne, up 1.4% from Tuesday's close.

The January 2022 iron ore contract on the China Mercantile Exchange in Dalian ended in daily trading up 1.9% at 802.50 yuan ($ 123.90) per tonne from a session high of 829 yuan, the highest level since 18 August.

This week, China's central bank governor pledged to stabilize credit supply and increase cash to support small businesses and the real economy after both credit and economic growth slowed in July.

In China, “people are hoping for some additional incentive targeting the infrastructure sector as real estate and manufacturing look bleak,” said Eric Hedborg, chief analyst at CRU Group, in a note.

Ongoing restrictions on steel production in China and covid-19 curbs weigh heavily on iron ore in recent weeks.

Prices are down more than 30% from record peaks in May, and further declines are possible, according to analysts Eric Headboard and Richard Lou of CRU.

“CRU predicts further declines in iron ore prices towards the end of the year as we see a more balanced market with Chinese demand that is likely to stabilize for the rest of the year, while offshore supply continues to improve,” they said in their latest market review. ... in sight.

Iron ore producers in Australia, the largest supplier to China's leading steel producer, are struggling to keep production strong, although analysts say shipments generally improve in the last quarter.