BEIJING (Reuters) – Iron ore futures in China surged to their highest close in over five months on Wednesday, on hopes of strong restocking demand from mills ahead of local holidays.
The most active May contract for iron ore futures on the Dalian Commodity Exchange jumped as much as 2.85% to 685 yuan ($98.69) per ton in morning trade, before settling up 2.1% at 680 yuan, the highest close since Aug. 2.
“Steel mills in south and east China are restocking actively before the upcoming Spring Festival holiday… but inventories at northern mills are still at relatively low level,” Tianfeng Futures wrote in a note.
The futures house expects steel firms in northern China to replenish at least another 1.95 million tons of iron ore before China’s New Year holiday, which falls on Jan. 24.
Meanwhile, escalating tensions in the Middle East may weigh on prices for the steelmaking ingredient.