Iron ore futures grew slightly on Monday, as market participants held onto hopes that stimulus measures would be implemented to revive faltering economic growth.
However, the government’s emphasis on restricting steel production to last year’s levels dampened the outlook for iron ore demand, keeping it bearish. Weak steel demand remained a concern, exacerbated by China’s manufacturing activity contracting for the fourth consecutive month.
In July, the official gauge of China’s manufacturing activity saw a slight improvement but remained in contraction territory, indicating ongoing weakness in the world’s second-largest economy. The manufacturing purchasing managers’ index stood at 49.3 in July, up from 49 in June, but still below the 50-point threshold that separates expansion from contraction.
Moreover, data revealed a decline in activity within China’s construction sector, dropping to 51.5 in July from 53.2 in June. The potential for construction sector revival was further dimmed by heavy rainfall in northern parts of the country.
However, the disappointing economic data fueled expectations that the Chinese government would introduce stimulus measures to bolster the economy.
During morning trading, Dalian iron ore futures for the September contract recorded a 0.54pct growth, closing at 841.5 yuan (USD 117.7) per ton. However, coke and coking coal futures experienced declines of 0.7pct and 1.91pct, settling at 2,282 yuan (USD 319) per ton and 1,462 yuan (USD 205) per ton, respectively.
On the Shanghai Futures Exchange, rebar futures saw a marginal increase of 0.16pct, reaching 3,847 yuan (USD 538) per ton. Conversely, HRC futures decreased by 0.22pct, reaching 4,084 yuan (USD 571) per ton, while wire rod futures posted a 1.24pct increase, settling at 4,325 yuan (USD 605) per ton. Stainless steel futures, on the other hand, rose by 0.86pct to 15,285 yuan (USD 2,138) per ton.
1 USD / 7.14 yuan
