Iron ore futures rose to a more than one-month high on Thursday, supported by China’s renewed push to curb low-price competition and cut excess industrial capacity.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended 2.45% higher at 733 yuan ($102.33) a metric ton – a peak since May 16.

The benchmark August iron ore on the Singapore Exchange was 1.1% higher at $96.2 a ton, as of 0706 GMT.

Beijing’s commitment to curbing low-price competition and reducing excess industrial capacity is an indication that China’s leaders are seeking to address the deflationary pressures affecting the economy, analysts from ANZ said in a note.

These measures are expected to provide some relief to the steel industry, which has been struggling with overcapacity, ANZ added.

The rise in steel prices has prompted retail traders to take long positions in iron ore futures, anticipating that prices will track gains in steel, said Atilla Widnell, managing director at Navigate Commodities in Singapore.

China’s Vice Premier Zhang Guoqing has called on local officials in Hebei, the nation’s top iron ore producing hub, to ramp up precautions ahead of expected heavy rainfall. The ongoing ‘Plum Rains’ have already caused flash floods and landslides in China’s north and west.

The dollar strengthened after a trade agreement between the U.S. and Vietnam boosted optimism for other deals ahead of the July 9 implementation of U.S. tariffs.

A stronger greenback makes dollar-denominated assets more expensive for holders of other currencies.

Other steelmaking ingredients on the DCE climbed, with coking coal and coke up 3.76% and 2.05%, respectively.

Steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar and hot-rolled coil increased 1.45%, stainless steel strengthened 0.55%, and wire rod went up 0.27%.
Source: Reuters