Dalian iron ore futures extended gains as the Chinese central bank reduced the borrowing cost of its medium-term policy loans for the first time in 10 months.
China’s medium-term lending facility serves as a funding channel for injecting liquidity into the banking system, and the rate cut is seen as a positive signal for the iron ore market.
The September contract for iron ore on the Dalian Commodity Exchange rose by 1.43pct, reaching 815.5 yuan (USD 113.8) per ton. Likewise, coke and coking coal futures saw notable increases, with prices rising by 1.42pct and 3.88pct respectively, reaching 2,140.5 yuan (USD 299) per ton and 1,379.5 yuan (USD 193) per ton.
In the Shanghai Futures Exchange, rebar futures climbed by 0.59pct to 3,760 yuan (USD 525) per ton, while HRC futures rose by 0.49pct to 3,861 yuan (USD 539) per ton. Wire rod futures also experienced a 0.45pct increase, reaching 4,251 yuan (USD 594) per ton. However, stainless steel futures dropped by 1.14pct to 15,135 yuan (USD 2,114) per ton.
Despite the optimistic market sentiments, the steel sector faces uncertainty. Analysts from Goldman Sachs have projected “persistent weakness” in the property sector, a significant consumer of steel, for years to come. Furthermore, the steel demand outlook remains uncertain due to the traditional summer slowdown in the construction sector.
1 USD / 7.16 yuan
