Iron ore extends gains on improving demand outlook

Iron ore futures extended gains on Friday as the near-term outlook improved on expectations of stronger steel demand and restrictions on certain BHP iron ore products.

Market participants expect steel production to rebound in key regions such as Hebei province following the lifting of temporary environmental output curbs.

Additional support came from reports that China’s state-backed buyer, China Mineral Resources Group (CMRG), has expanded restrictions on several BHP-sourced iron ore grades, including Newman lump and fines as well as MAC fines, amid an ongoing pricing dispute that began in September last year. The dispute reportedly includes demands for pricing linked to more favorable indices for buyers and settlement in yuan rather than USD.

However, higher iron ore inventories at major Chinese ports remain a key headwind that could limit further price gains.

In the physical steel market, Chinese traders said sentiment has improved as inquiries increase. Market participants expect seasonal demand during the spring construction period to support the domestic market in the near term. Export activity, however, remains slow amid uncertainty caused by tensions in the Middle East and volatile freight rates.

On the Dalian Commodity Exchange, the most-traded May iron ore contract rose 2.33pct to 811.5 yuan (USD 117.6) per ton, closing above the 800-yuan level for the first time since January 16. The contract also increased by more than 5pct compared with last Friday’s morning session.

Coking coal and coke futures gained 1.51pct and 0.61pct to 1,178 yuan (USD 171) per ton and 1,737.5 yuan (USD 252) per ton, respectively.

On the Shanghai Futures Exchange, rebar futures rose 0.58pct to 3,142 yuan (USD 456) per ton, while HRC futures increased 0.52pct to 3,295 yuan (USD 478) per ton. Wire rod futures climbed 0.51pct to 3,375 yuan (USD 489) per ton, while stainless steel futures slipped 0.46pct to 14,190 yuan (USD 2,058) per ton.

1 USD / 6.89 yuan