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| China’s Dalian Commodity Exchange(DCE) |
Iron ore futures in China have reached a four-month high, driven by a resurgence in steel demand following the Lunar New Year holidays and renewed investor confidence in the property sector.
Iron Ore Prices Reach New Highs
The most actively traded May iron ore contract on the Dalian Commodity Exchange (DCE) climbed 1.48% to 822 yuan ($112.86) per metric ton in morning trading on Friday, marking a 1.61% weekly gain. Earlier in the session, it touched 825 yuan, its highest level since October 8. On the Singapore Exchange, the benchmark March iron ore contract gained 0.86%, reaching $106.85 per ton, logging a weekly rise of 0.23%.
Market Outlook and Trade Tensions
Steel mills across China have restarted production post-holiday, contributing to short-term demand growth for iron ore. According to Chinese consultancy Hexun Futures, this uptick in production has helped sustain iron ore prices. Mysteel, another Chinese consultancy, reported that blast furnace operations have increased this week as mills ramp up output after scheduled maintenance periods.
The Shenzhen government has appointed 10 new executives at China Vanke, further strengthening its control over the major property developer. Investors responded positively to last month’s management overhaul, interpreting it as a stabilizing measure for China’s troubled real estate sector.
Despite the price rally, trade tensions remain a significant risk factor. Analysts from ANZ noted that the iron ore and steel markets face challenges amid ongoing trade disputes. This week, the U.S. government imposed broad 10% tariffs, triggering retaliatory levies from China, including a 15% tariff on U.S. coal—an essential steelmaking input.
Other raw materials for steelmaking also surged, with coking coal and coke on the DCE rising 2.98% and 3.92%, respectively. Steel futures on the Shanghai Futures Exchange showed gains across the board: rebar climbed nearly 0.9%, hot-rolled coil advanced 0.76%, wire rod surged 2.3%, and stainless steel edged up 0.07%.
With Chinese steel mills ramping up production and the government showing increased involvement in the property sector, iron ore prices may continue to see strong support. However, potential escalations in trade tensions could introduce volatility in the global iron ore and steel markets.
