Iron ore futures jumped on Thursday, with Dalian prices scaling a new 2020 peak and the Singapore benchmark up for an eighth straight session, as more signs of improving downstream steel demand in China supported prices.
Iron ore for September delivery on China’s Dalian Commodity Exchange DCIOcv1 closed the day 2.9% higher at 910 yuan ($131.00) a tonne.
Iron ore’s September contract on the Singapore Exchange climbed 2.8% to $115.44 a tonne in afternoon trade, extending its rally into the eighth session.
Rising car and excavator sales in China further buoyed sentiment, analysts at Beijing-based Sinosteel Futures Co Ltd said in a note.
“Good car sales data shows that domestic demand is improving, and excavator sales also mean that the construction machinery industry and infrastructure are improving,” they said.
China’s automobile sales volume in July was estimated at 2.08 million, up 14.9% from a year earlier, while excavator sales increased more than 40%, they said.
Steel mills continued to ramp up output in anticipation of increased domestic demand with the end of the wet season in southern and eastern China, lifting physical prices to 12-month highs.
Benchmark 62% iron ore was at $116.50 a tonne on Wednesday, SteelHome consultancy data showed. SH-CCN-IRNOR62
Average daily crude steel output among the 97 member-mills of China Iron and Steel Association rose 1.6% over the last 11 days of July to 2.17 million tonnes, from mid-July level, according to Mysteel consultancy.
Supply constraints also supported iron ore prices, with analysts citing a decline in arrivals and slow offloading at Chinese ports, and lower shipments from Australia and Brazil last week.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 rose 0.8%, but hot-rolled coil SHHCcv1, used in cars and home appliances, slipped 0.2%, while stainless steel SHSScv1 advanced 0.8%.
Coking coal DJMcv1 gained 1.2% and coke DCJcv1 climbed 0.5%.