Market Commentary
Iron ore futures advanced to above $115 on Wednesday following a pickup in restocking activities. Chinese trade participants have intensified their restocking ahead of the week-long Nation Day holiday starting from 1 October. The restocking came despite the outlook over the post-holiday demand remains somewhat mixed while there are growing concerns over raw material demand as China’s power crisis continues. In Jiangsu, China’s second-largest steel producing province, 70% of steel production lines have been affected by energy-control measures, according to its local steel industry group. Nationwide, production sank 7.2% month-on-month in the middle third of September, according to a survey by the China Iron & Steel Association. On top of power curbs, production cuts during winter and a push to improve air quality during the Winter Olympics will also pressure steel volumes in the near term, UBS Group AG analysts including Myles Allsop wrote in a report.
Futures in Singapore advanced to above $115 in London morning. Oct was seen trading as high as 116.5 in early London trading before drifting down to as low as 115.0 as the morning progressed. Nov also traded down from 114.75 to 114.05. Cal 22/23 was a smidge lower at 9.10. Oct/Nov traded down from 0.95 to 0.90 while Oct/Dec also traded at 1.60.
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