Iron ore price up on China stimulus hopes

Port of Qinqdao, China. Stock image.

Iron ore price rose on Friday, extending a rally spurred by surprise growth in China’s factory activity in May.

Market commentators continue to speculate about China rolling out additional stimulus to support its economic recovery.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $105.63 a tonne Friday morning, up 2.8%.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended daytime trading 2.9% higher at 745.50 yuan ($107.85) a tonne, off a session high of 755.50 yuan, its strongest since April 21.

Dalian iron ore has risen nearly 9% this week, “in a sign that onshore traders are becoming more upbeat about the outlook for demand in China”, Westpac analysts said in a note.

China’s factory activity unexpectedly swung to growth in May from decline, the Caixin/S&P Global manufacturing purchasing managers’ index showed on Thursday.

Analysts, however, said further policy support is needed to ensure China’s economic recovery will be sustained as other activity data were uninspiring, including the country’s April industrial output which grew much less than expected.

(With files from Reuters)