IRON ore futures surged following improved margins for Chinese steel manufacturers taking the raw material’s surge since a low in September to about 50%, said Bloomberg News.
Futures in Singapore were up 10% at $137.25 a ton, said the newswire citing prices in an article published at 05.56 GMT.
“Steel output is reportedly set to increase in October in some parts of China, like Tangshan, Jiangsu, Zhejiang and Anhui, after these regions exceeded steel production cuts in September,” according to a note by Vivek Dhar, commodities analyst at Commonwealth Bank of Australia.
“The impacted mills may see November output either match or exceed October levels,” Bloomberg quoted Dhar to have written.
Speaking at the Financial Times Mining Summit last week, Fortescue Metals Group CEO Elizabeth Gaines said that the iron ore market is very “robust,” even though prices have dropped recently on a property slowdown and steel output curbs.
However, iron ore prices were due for more weakness, according to UBS Group AG strategist Wayne Gordon. In an article in September by Bloomberg News, he was quoted as saying the mineral’s price will fall to $80 to $90 a ton heading into next year.
Curbs on steel output, alongside a property crackdown and concerns about a power shortage, have hammered iron ore demand in China.
“With a continuous rollout of energy-consumption curbs, mill maintenance works have been expanding, and volumes of construction steel in particular have slid massively,” Haitong Futures Company analyst Qiu Yihong told Bloomberg News in September.