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Iron ore futures rose on Thursday, buoyed by positive investor sentiment ona recovering Chinese economy and lower inventory, though weaker-than-expected steel output capped gains.
The most-traded January iron ore on China’s Dalian Commodity Exchange rose 0.4% to 866.5 yuan per metric ton at the close of daytime trade, rising for a seventh straight session.
On the Singapore Exchange, the benchmark November iron ore was up 1% at $116.85 a metric ton.
“Iron ore futures are rallying this morning purely in response to robust, upwardly revised Chinese Q3 GDP figures,” said Atilla Widnell, Managing Director at Navigate Commodities.
We know from daily downstream consumption data that this recovery has not eventuated in steel-intensive real estate or manufacturing industries, and would strongly warn about reading too much into these headline numbers, Atilla added.
China’s economy grew at a faster-than-expected clip in the third quarter. Consumption and industrial activity in September also surprised on the upside, suggesting the recent flurry of policy measures is bolstering a tentative recovery.
The iron ore market also witnessed a boost from dwindling inventories, with iron ore stocks down to 105.2 million tons as of Oct. 13, their lowest levels since 2016 according to data from consultancy firm Steelhome.
China’s crude steel output fell 5% in September from August, confounding some market expectations for a rise after steelmakers had lifted utilisation rates amid the peak construction season.
Additionally, new home prices fell for the third straight month in September, dashing hopes of a turnaround in demand during a traditionally peak month for home buying.
Steel benchmarks on the Shanghai Futures Exchange were mixed. The most-active rebar contract gained 0.3%,hot-rolled coil edged up 0.1%,wire rod fell 1.1%,while stainless steel gained 0.3%.
Other steelmaking ingredients on the Dalian exchange fell, with coking coal and coke down 1.8% and 1.5%, respectively.