Iron ore topped up its biggest weekly gain in 13 weeks as traders tracked China’s moves to rein in Covid-19 restrictions that have weighed on steel demand this quarter.
Futures in Singapore crept higher on Monday morning after surging more than 7% last week on optimism over China’s plans to get the economy moving again after sweeping lockdowns.
Beijing authorities said the capital will resume public transport in most districts, restart dine-in restaurant services and allow workers to return to offices. This comes after the city achieved zero new community cases in most of its 16 districts.
The steel-making ingredient shot through $140 a ton last week after spending most of May fluctuating around $130 a ton. Investors are tracking what’s next for demand after a terrible period for construction and manufacturing activity. There’s expectations for more infrastructure spending.
In a positive sign, iron ore inventories at major ports plunged to their lowest levels for the year, reaching an eight-month low, according to Steelhome data. And steelmaking margins are expanding again after shrinking to a 15-month low in May.
Still, investors will likely await firmer signs that China’s cities won’t move back into lockdowns again given the country’s Covid Zero policy. And any production curbs on steel will also be monitored after an earlier pledge for output to drop again this year, Baocheng Futures wrote in a note.
Iron ore in Singapore rose 0.7% to $143.75 a ton as of 11:48 a.m. local time, to head for its highest close in a month. Futures in Dalian climbed 1.1% after a trading pause for a public holiday on Friday. Steel rebar and hot-rolled coil futures advanced in Shanghai.