SYDNEY – After what’s been a tough quarter, iron ore’s getting a small reprieve. Futures clawed their way back above $60 a metric ton and spot prices have rebounded from a one-year low as steel output holds up in China, buoying demand for the material even as its supply rises.
The SGX AsiaClear contract rallied as much as 3.1% to $61.43 a ton, the highest in five weeks, while futures on the Dalian Commodity Exchange held gains. On Tuesday, benchmark spot ore with 62% delivered to Qingdao surged 5.2% to $59.70 a dry ton, according to Metal Bulletin. Miners shares advanced, including BHP Billiton and Rio Tinto.
The commodity’s uptick this week has pared losses seen this quarter spurred by concerns about rising production, especially of low-cost supply, and China’s moves to rein in leverage. Premier Li Keqiang said on Tuesday that Asia’s top economy is on track to meet growth targets. Both steel coil and rebar in China are headed for gains in June after a multi-month run of losses.
“After the recent sell-off, iron-ore’s due for a rebound and is gaining favour with funds,” Maike Futures Co. analysts Dang Man and Ren Jiaojiao said in a note. “An improvement in profit margins has incentivised steelmakers to sustain production,” they said. China makes half of the world’s steel.
Steel extended gains on Wednesday, with reinforcement-bar futures closing 1.7% higher in Shanghai, and hot-rolled coil adding 1.2% to a three-month high. Spot iron ore, which bottomed at $53.36 on June 13, remains 26% lower this quarter, the most since the first three months of 2015.
Miners climbed in Sydney. Rio Tinto rose 2.5% as BHP Billiton added 1.9%, with both stocks capping their fifth consecutive daily gain. Fortescue Metals Group increased 4.1%, up for a third session. They are Australia’s biggest exporters.