Iron ore futures rose on Wednesday, lifted by short-covering and expectations that Chinese steel mills will restock before the Lunar New Year holiday. The most-traded contract on the Dalian Commodity Exchange closed the day session up 1.56 percent at 682 yuan ($102.01) per tonne, recovering from a 0.7 percent fall on Tuesday. Earlier in the session it touched 685 yuan, its highest level since 29 October.
Singapore mirrors the move
The December iron ore reference on the Singapore Exchange rose 1.27 percent to $91.85 per tonne, also its highest since 29 October. Jiang Mengtian, analyst at Horizon Insights, said market fundamentals remained weak, but a level near $90 per tonne created strong technical support, limiting room for further declines.
Analysts at Guoxin Futures said steel mills should restock before the Lunar New Year holiday, which could support prices in the short term. Chinese mills typically build up seaborne iron ore stocks in the fourth quarter to cover production needs during the one-week holiday in February of the following year.
Supply and demand balance
Analysts at Macquarie said lower domestic iron ore output in China had partially offset an expected rise in seaborne supply in the fourth quarter.
The yuan traded at 6.6703 per US dollar as of 12:46 GMT on Wednesday, by MacroHerald’s own measurement. Short-covering added further momentum to the rebound after Tuesday’s decline.
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Data: Swissquote
