**Iron Ore Prices Surge Amid Signs of Recovery in China’s Steel Demand**
*By Amy Lu and Lewis Jackson*
Beijing (Reuters) – Iron ore futures experienced a significant uptick on Friday, marking the highest levels seen in over four months and indicating a promising weekly gain for traders. This increase is bolstered by encouraging signs of recovery in steel consumption within China, the world’s leading consumer, alongside renewed optimism for potential economic stimulus measures.
The May iron ore contract, which is the most actively traded on the Dalian Commodity Exchange (DCE), concluded the day’s trading at 838.5 yuan ($115.75) per metric ton, reflecting a gain of 1.51%. It reached a notable peak of 844 yuan per ton earlier in the session—the highest price since October 8, 2024.
Meanwhile, the benchmark March iron ore on the Singapore Exchange also followed suit, adding 0.06% to trade at $108.75 per ton around 0711 GMT, having hit a high of $109.3 earlier in the day. Overall, both benchmarks are poised to record an approximate 3% increase for the week.
A report from consultancy Mysteel revealed a marked increase in downstream steel consumption, with transactions of construction steel products surging by 44% week-on-week, reaching 112,600 tons on Thursday. This uptick lends support to iron ore prices and reflects growing expectations for stronger rebar demand, particularly as the peak construction season approaches with the arrival of warmer weather in March.
Analysts from COFCO Futures commented, “Given the potential for policies aimed at stabilizing economic growth to be announced in March, we anticipate that steel prices will stay robust until mid-to-late March.”
Adding to the positive sentiment are the assurances from China’s central bank, which affirmed its commitment to provide substantial financial support for the private economy and the development of private enterprises.
However, it’s worth noting that the average daily output of hot metal—a key indicator of iron ore demand—has declined for two consecutive weeks, down 0.2% from the previous week to 2.28 million tons as of February 20. This may somewhat temper the gains observed in iron ore prices.
In terms of other steelmaking materials, coking coal and coke prices on the DCE also saw an upswing, advancing by 2.12% and 1.77%, respectively. On the Shanghai Futures Exchange, various steel benchmarks also found traction; rebar climbed by 0.9%, hot-rolled coil increased by 0.81%, and stainless steel gained 0.38%, although wire rod saw a slight decline of 0.17%.
In summary, while the iron ore market is experiencing upward momentum driven by increasing construction-related steel demand and potential economic policies, traders should remain cautious of tempered production rates that may limit overall gains. As always, close monitoring of market trends and geopolitical developments is crucial for informed trading decisions in the volatile commodities market.
**USD/CNY Exchange Rate: $1 = 7.2440 Chinese yuan renminbi**
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