The price of iron ore in Singapore jumped on Tuesday after falling for two straight sessions as China, the world’s largest producer of steel, Continued increasing output in order to benefit from the peak construction season in September and October.
Benchmark While the September contract increased just 0.2% to $98.60, October iron ore on the Singapore Exchange increased 1.5% to a session high of $97.05 per tonne.
The Most active January iron ore contract on China’s Dalian Commodity Exchange finished daytime trading 1.1% higher at 718.50 yuan ($100.36) a tonne.
Rebar output increased 26,700 tonnes (0.9%) from the previous week to about 3.1 million tonnes among the 137 Chinese steel factories included in a weekly poll by industry information supplier.
Prior to China’s week-long National Day holiday beginning on October 1, steel mills are also refilling their iron ore supplies.
The market’s gains on Tuesday showed that it still had some faith in the improvement in Chinese steel production and demand continuing into September and October.
According to data from CISA—The China Iron & Steel Association, which represents the industry—the average daily output of crude steel from large steel mills climbed by 2.23% in mid-September compared to early September as the sector prepared for peak construction.
On the Shanghai Futures Exchange, Rebar increased by as much as 2.5% to reach its highest price per tonne since August 29 at 3,845 yuan.
While stainless steel gained 0.3%, hot-rolled coil advanced 2.3%.
Other materials used in producing steel also increased, with coke and coking coal from Dalian rising 2.9% and 2.7%, respectively.
Traders ignored statistics suggesting that between January and August, as a result of harsh COVID-19 regulations and a worsening real estate recession, profits at China’s industrial enterprises declined more quickly.