March 11, 2020 / 3:45 AM / a month ago

China iron ore futures hit 1-week high on demand recovery hopes

* Xi’s visit to China’s coronavirus epicentre helps lift mood

* China’s new coronavirus cases rise on infections from abroad

By Enrico Dela Cruz

MANILA, March 11 (Reuters) - Iron ore futures in China scaled their highest in a week on Wednesday, rising for a second straight session on hopes that demand for the commodity would improve in the world’s top steel producer.

The overall mood in China’s ferrous futures markets was upbeat a day after President Xi Jinping’s visit to Wuhan, the epicentre of the coronavirus outbreak in the country, where the death toll from the epidemic reached 3,158 by Tuesday.

Iron ore on the Dalian Commodity Exchange rose as much as 2.1% to 667.50 yuan ($95.90) a tonne, the highest since March 5, after Tuesday’s 3.5% gain.

On the Singapore Exchange, however, the front-month April contract shed as much as 0.9%.

“Prices remain driven by speculation as people are hoping that demand in China would pick up after the epidemic has been put under control, but I think it will still take some time,” a Shanghai-based trader said.

“Outside China, the situation is quite serious,” he said.

Market fundamentals are not very encouraging, the trader added, citing China’s huge inventory of steel products that is still piling up as downstream demand has yet to fully recover.

While business activities are gradually resuming in China after being disrupted for weeks by the epidemic, normality in the domestic construction sector, in particular, may not be seen until after two more months, he said.

Xi’s visit to Wuhan, however, helped improve sentiment.

“China watchers (are) taking this as a sign that Xi believes victory over the virus is within reach,” said Tapas Strickland, director of economics at National Australia Bank in Sydney.

Mainland China, however, reported 24 new confirmed cases on Tuesday, up from 19 a day earlier and reversing four straight days of fewer new cases, driven by infected individuals arriving from abroad.

Outside China, the coronavirus headlines were grimmer, with badly-hit Italy imposing strict measures including a nationwide lockdown as the virus continued to spread globally, causing further business disruptions.

FUNDAMENTALS

* Construction steel rebar on the Shanghai Futures Exchange was up 0.8% and hot-rolled coil climbed 0.4%, but stainless steel was little changed, as of 0314 GMT.

* Coking coal and coke both added 0.3%.

* Industry benchmark 62% iron ore’s spot price settled at $90.80 a tonne on Tuesday, rebounding after a two-day decline, based on data from SteelHome consultancy. SH-CCN-IRNOR62

($1 = 6.9607 yuan)

Reporting by Enrico dela Cruz; Editing by Aditya Soni

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