Dalian iron ore futures climbed on Friday to their highest close in 4-1/2 months and logged a fourth consecutive weekly gain, as upbeat demand outlook and hopes for further policy support from Beijing boosted market sentiment.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) rose 0.38% to 785 yuan ($109.34) a metric ton. The contract gained 3.66% this week.

The benchmark August iron ore (SZZFQ5) on the Singapore Exchange was 0.18% lower at $100.65 a ton, as of 0740 GMT, but up 1.38% for the week.

Traders are optimistic about improving steel margins following Beijing’s signals to tackle overcapacity, while hopes for new property-sector stimulus have further lifted market sentiment, analysts from ANZ said in a note.

Lower inventories for both iron ore and steel are also fuelling expectations of restocking in the months ahead, ANZ said.

Total stockpiles of iron ore across ports in China fell 0.76% week-on-week to 130.9 million tons, as of July 18, according to consultancy SteelHome data, lending further support to prices.

Meanwhile, current demand for iron ore is resilient, and steel consumption in the manufacturing sector remains at a high level, said broker Galaxy Futures.

Expectations of supply-side policy reforms are also providing further support to prices, Galaxy said.

Although it is the off-season for finished product demand, steel demand has increased amid lower supply due to some blast furnaces undergoing mid-year maintenance, broker Hexun Futures said in a note.

Other steelmaking ingredients on the DCE rose, with coking coal NYMEX:ACT1! and coke (DCJcv1) up 2.55% and 1.23%, respectively.

Steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar RBF1! inched 0.74% higher, wire rod (SWRcv1) increased 1.18%, hot-rolled coil EHR1! was up 0.91%, and stainless steel HRC1! strengthened 0.39%.
Source: Reuters