Market Outlook: Iron Ore Recovers on Improved Steel Margins and Declining Port Stocks

Futures iron ore prices have recovered with the help of improvements in steel margins, a decline in port stocks, and hopes for stimulus in China; however, gains remained seasonally limited by slow demand. The May iron ore contract on the Dalian Commodity Exchange (DCE) ended morning trading at 775 yuan/ton ($106.18), up 0.91%. The contract had fallen by 1.8% last week. The benchmark January iron ore on the Singapore Exchange rose to $100.8/ton, an increase of 1.98% at 06:21 GMT. The contract had dipped to $98.95/ton during the early hours of the day. While the Dalian contract is down 16.4% so far this year, the Singapore contract has decreased by 19%. Analysts noted that while hot metal production is expected to fall further in January, a significant decline is not anticipated considering that steel producers can still be profitable. On the DCE, coking coal and coke rose by 1.01% and 0.06%, respectively. At the Shanghai Futures Exchange, rebar increased by 0.58%, hot-rolled coil by 0.32%, and stainless steel by 0.23%, while wire rod decreased by 0.17%.