Prices of steelmaking ingredients in China climbed on Tuesday on hopes for additional policy support to shore up the world's second largest economy and biggest steel producer now battling a COVID-19 surge.
The most-traded Dalian iron ore for September delivery DCIOcv1 ended daytime trading 0.5% higher at 867.50 yuan ($136.24) a tonne.
Rising for a fourth straight session, Dalian iron ore touched a session high of 879 yuan, near Monday’s seven-month peak at 882.50 yuan.
Iron ore's most-active May contract on the Singapore Exchange SZZFK2 was down 0.1% at $154.80 a tonne by 0703 GMT.
Dalian coking coal DJMcv1 climbed 3.2% and coke DCJcv1 gained 3.5%.
Still, traders were cautious in pushing iron ore prices higher following the Dalian exchange's announcement of higher transaction fee and margin requirement for speculative trading.
Dalian iron ore has risen about 30% this year, notwithstanding recent moves by Chinese authorities to curb a rally amid concerns about inflation as commodity prices soared.
Iron ore's advance also came despite COVID lockdowns in China that could further dampen growth prospects for the top metals consumer.
“Expectations of policy support in China outweighed concerns of weaker demand amid lockdowns,” ANZ commodity strategists said in a note.
China's central bank is likely to lower banks' reserve requirement ratios in the second quarter, the official Securities Times reported on Tuesday, citing analysts.
Fitch Ratings, in a statement, said the costs of iron ore and coal were likely to remain high in 2022 due to geopolitical tensions and state-mandated measures to reduce carbon emissions.
It also expects steel demand to recover “quite strongly” in the second quarter when the lockdowns are lifted.
Despite the lockdowns, traders said some mills particularly in China's steel production hub in Tangshan city and factories in other areas hit by the coronavirus surge continued to operate.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 gained 0.3%, while hot-rolled coil SHHCcv1 slipped 0.7%. Stainless steel SHSScv1 slipped 0.8%.
Source: Reuters
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