Iron ore futures extended their rally for a fourth consecutive session on Friday, driven by Beijing’s recent stimulus measures.
This week, China’s central bank announced a reduction in the reserve requirement ratio (RRR), which is the amount of cash banks must hold in reserves. Additionally, the central bank lowered the interest rate on seven-day reverse repurchase agreements, which involves the purchase of securities from commercial banks with the agreement to resell them at a higher price on a specified future date. A decrease in the reverse repo rate can result in lower lending rates, encouraging borrowing and investment, thereby boosting economic growth.
These steps are part of China’s broader stimulus package aimed at reviving the economy, which also includes support for the property sector and capital markets.
Further supporting iron ore prices was the ongoing decline in finished steel inventory at major Chinese warehouses. Although port-side iron ore inventory remains high, it also posted a weekly decline, indicating that Chinese steel mills are restocking ahead of the October 1-7 public holidays, anticipating strong demand afterward.
However, some analysts remain cautious, noting that the steel sector’s outlook will become clearer after the holiday week. The key question is whether finished steel demand will maintain its positive momentum and if increased production will lead to oversupply, which could pressure prices.
On the Dalian Commodity Exchange, the most-traded iron ore contract rose by 4.38pct to 750 yuan (USD 106.8) per ton, marking a 12pct gain for the week. Coke and coking coal futures also saw significant increases, climbing by 4.02pct to 2,055 yuan (USD 293) and 4.86pct to 1,402 yuan (USD 200) per ton, respectively.
Meanwhile, on the Shanghai Futures Exchange, rebar futures rose by 2.58pct to 3,341 yuan (USD 476) per ton, and HRC futures were up by 2.94pct to 3,430 yuan (USD 489) per ton. Wire rod futures inched down by 0.17pct to 3,450 yuan (USD 492) per ton, while stainless steel futures gained 0.63pct to 13,475 yuan (USD 1,920) per ton.
1 USD / 7.01 yuan
| Material | Closing Price (in yuan) |
Difference from Night Session (pct) |
Difference from Previous Morning Session (pct) |
| Wire Rod | 3,450 |
-0.17 |
2.14 |
| HRC | 3,430 |
2.94 |
2.27 |
| Rebar | 3,341 |
2.58 |
1.80 |
| Stainless Steel | 13,475 |
0.63 |
0.52 |
| Iron Ore | 750 |
4.38 |
2.93 |
| Coke | 2,055 |
4.02 |
2.70 |
| Coking Coal | 1,402 |
4.86 |
2.85 |
