Iron ore futures gain on improved economic data

China’s iron ore futures edged higher on Wednesday as the country’s manufacturing sector returned to growth in September, although weak steel demand and cautious mill procurement continued to limit gains.

China’s official manufacturing purchasing managers’ index (PMI) rose to 50.1 in September, returning to expansion territory. The production sub-index climbed to 51.7, while the new orders index reached 50.5, indicating an improvement in manufacturing activity and demand.

However, the recovery in manufacturing activity has yet to translate into stronger buying in the iron ore spot market. Trading remained subdued, with steel mills largely staying on the sidelines. Weak steel demand and deteriorating mill profitability continued to weigh on sentiment.

The upcoming National Day holiday from October 1-7 is expected to reduce trading activity, while high port inventories and rising global iron ore supply remain headwinds.

On the Dalian Commodity Exchange, the most-traded iron ore contract rose 0.14 pct to 702.5 yuan (USD 104.7) per ton. Coking coal fell 0.17 pct to 1,449 yuan (USD 216) per ton, while coke increased 0.56 pct to 1,958.5 yuan (USD 292) per ton.

On the Shanghai Futures Exchange, HRC futures slipped 0.15 pct to 3,274 yuan (USD 488) per ton, while rebar rose 0.10 pct to 3,112 yuan (USD 464) per ton. Wire rod increased 0.63 pct to 3,378 yuan (USD 504) per ton, while stainless steel fell 0.62 pct to 13,700 yuan (USD 2,043) per ton.

1 USD / 6.7 yuan