MANILA (Reuters) – Dalian iron ore futures surged to a record peak on Friday and posted their biggest weekly gain since February, buoyed by expectations of sustained tightness in supply and brisk demand amid China’s renewed drive to support its slowing economy.
The most-actively traded September iron ore contract on the Dalian Commodity Exchange rose as much as 4% to 797.5 yuan ($115.20) a tonne, the highest since Dalian iron ore futures started trading in 2013.
It ended the session 2.2% higher at 783.5 yuan, posting a weekly gain of 11.4%. It has risen around 80% this year. “Chinese ore demand has been robust and is likely to remain so for the near term,” said Westpac Banking Corp.
While profit margins for steel mills have moderated from 2018 highs, they are still well above where they were for most of the previous decade, it said. That encourages mills to continue to produce more.
Spot iron ore prices have also resumed their rally, with the benchmark 62% grade for delivery to China hovering near a five-year high at $107.50 a tonne on Thursday, up from $104.50 the previous day.
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