Iron ore futures rebound on renewed China support hopes

By Enrico Dela Cruz

June 23 (Reuters) - Dalian iron ore rebounded in afternoon trade on Thursday erasing earlier losses as Chinese markets were lifted by President Xi Jinping's pledge to take more effective measures to achieve the country's economic and social development goals.

The most-traded iron ore, for September delivery, on China's Dalian Commodity Exchange DCIOcv1 ended daytime trade 2.5% higher at 749.50 yuan ($111.77) a tonne, rebounding from a 16-week low hit on Wednesday.

Losses early in the session had put Dalian iron ore on track for what would be its longest losing streak since the 2013 launch of futures trading for the commodity on the Chinese bourse.

Iron ore's front-month July contract on the Singapore Exchange SZZFN2 traded higher throughout the session, rising 5.6% to $114.20 a tonne by 0842 GMT.

Xi, speaking at the opening ceremony of the BRICS Business Forum via video link on Wednesday, called for greater coordination on economic policy to avoid a fragile recovery from being disrupted.

China would step up macro-policy adjustments and take more effective measures to achieve its annual economic and social development goals while minimising the impact of the COVID-19 epidemic as much as possible, Xi said, without giving details.

Construction steel rebar on the Shanghai Futures Exchange SRBcv1 gained 1.6%, while hot-rolled coil SHHCcv1 added 0.9%, following recent sell-offs.

Stainless steel SHSScv1 rose 1.1%.

Dalian coking coal DJMcv1 climbed 2.2% and coke DCJcv1 advanced 3.4%.

Despite Thursday's gains, iron ore and other steelmaking ingredients remained on track for steep weekly losses as rising steel inventories and weak margins in China have prompted a slowdown in production.

"The lack of growth in economic activity has seen steel demand suffer. This has led to a build-up in inventories, which is finally leading to a slowdown in steel production," said ANZ senior commodity strategist Daniel Hynes.

COVID-19 restrictions and disruptions to construction activity caused by heavy rains in some parts of China also weighed on sentiment.

(Reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips and Shailesh Kuber)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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