The iron ore price reached a four-week high on Thursday bolstered by rebounding steel margins in China and hopes of solid economic recovery for the world’s biggest steel producer.
Steel prices also stretched gains, hitting two-week highs in Shanghai following a Financial Times report saying China will help cash-strapped property developers by issuing 1 trillion yuan ($148.3 billion) in loans for stalled projects.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $119.74 a tonne Thursday morning, up 6.8%.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended daytime trade 7.2% higher at 793.50 yuan ($117.67) a tonne.
Twelve blast furnaces in China have resumed operations as margins improved, Chinese metals information provider SMM reported, although dozens remained shut for weeks as weak steel demand and low prices had recently squeezed profits.
Iron ore and other steelmaking ingredients have now been supported by what analysts at Zhongzhou Futures said is a “sharp recovery” of margins, and upbeat Chinese economic data, with industrial output and profits recovering in June.
“The impact of accelerating pro-growth policy measures will drive a solid 3Q economic recovery, suggesting that the operating environment for industrial corporates will likely improve steadily,” J.P. Morgan analysts said in a note.
(With files from Reuters)