Iron ore prices surged on Friday, reaching their highest levels in nearly two weeks, driven by steady demand and growing expectations for further stimulus measures in China, the leading consumer of iron ore. The May iron ore contract on the Dalian Commodity Exchange (DCE) closed 2.32% higher, hitting 794 yuan ($109.79) per metric ton, marking a weekly increase of 2.5%. Meanwhile, the benchmark April iron ore contract on the Singapore Exchange rose 1.55% to $103.8 a ton, the highest price since February 28, with a total gain of 3.3% for the week.
The rise in prices followed an announcement from China’s central bank that it would lower interest rates and banks’ reserve requirements as needed while maintaining ample liquidity. This decision has buoyed market sentiment and reinforced expectations about future demand. Additionally, the demand for iron ore remains robust as steelmakers have increased their production during the peak construction season in March.
A survey by consultancy Mysteel indicated that the average daily output of hot metal, a key indicator of iron ore demand, rose for the third consecutive week, reaching 2.31 million tons. However, challenges persist. The ongoing global trade tensions could impact demand projections, and China’s plans to reduce crude steel output introduce potential headwinds for the market.
Nonetheless, prices for other steelmaking inputs on the DCE also saw gains, with coking coal and coke rising by 0.69% and 0.03%, respectively. On the Shanghai Futures Exchange, most steel benchmarks advanced, with rebar, hot-rolled coil, wire rod, and stainless steel showing notable increases.