by Enrico De la Cruz
(Reuters) – Dalian and Singapore iron ore futures rose for the third consecutive session on Monday, boosted by renewed optimism around demand for the steelmaking raw material, as signs emerged that the largest producer of iron ore steel will increase production this month.
The most active iron ore contract for January on the Singapore Stock Exchange rose by as much as 6.7% to $127.95 a ton, the highest since October 12th. Around 8:40 am (Brasilia time), it rose about 4%
The most traded iron ore for May delivery on the Dalian stock exchange ended the morning session up 0.7% at RMB 687.50 ($107.80) per tonne.
The rally in futures mirrored bullish sentiment in the physical market, with 62% iron ore trading at $125 a ton on Monday, up $5, based on data from consultancy SteelHome.
“Analysts expect a rebound in steel production as Beijing’s annual targets are met, prompting mills to resume production,” resource sector consultant and broker SP Angel said in a Dec. 17 note.
With China producing 946.36m tonnes of crude steel during January-November, down 2.6% from the previous year, there is room for mills to increase production as the target is to limit the production of this year to no more than last year’s volume of 1.05 billion tons, to control emissions.
Crude steel production in the first 10 days of December was up 12% from the previous month, ANZ analysts said, citing data from the China Iron and Steel Association.
(By Enrico Dela Cruz in Manila)
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