Dalian iron ore snaps 3-day slide on fresh China stimulus, but set for weekly loss
By Gabrielle Ng
SINGAPORE, July 26 (Reuters) -Dalian iron ore futures snapped a three-session slide on Friday buoyed by fresh stimulus from top consumer China, but remained on track for a weekly loss amid concerns about demand from the ailing property sector.
The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 ended morning trade 1.95% higher at 782.5 yuan ($107.94) a metric ton. The contract was down 2.31% on a weekly basis.
The benchmark August iron ore SZZFQ4 on the Singapore Exchange was 2.29% higher at $102.20 a ton, as of 0401 GMT, shedding 4.41% so far this week.
China's industrial metals complex is "pumped" by an allocation of 300 billion yuan ($41.40 billion) in bond funds for economic recovery, which includes subsidies for replacing and upgrading steel-intensive consumer and industrial goods, said Cameron Law, a commodities analyst at Navigate Commodities.
While the stimulus package is bullish for manufacturing activity, its overall size will not be sufficient to mitigate the construction sector's "ongoing capitulation" or address the Chinese consumer's attitude towards property, said Law.
Reports of rising steel inventories from China highlight ongoing weakness in the steel market amid a slump in construction activity in the property sector, ANZ analysts said in a note.
Stocks of finished steel products at traders' warehouses in 132 Chinese cities declined 0.8% week-on-week during July 19-25 to reach a one-month low of 21 million tons, but were up 11.9% year-on-year, data from consultancy Mysteel showed.
The market is now looking ahead to the Politburo meeting next week for new measures that may support economic growth, added the ANZ analysts.
Other steelmaking ingredients on the DCE rose, with coking coal DJMcv1 and coke DCJcv1 up 0.41% and 0.67%, respectively.
Steel benchmarks on the Shanghai Futures Exchange recorded gains. Rebar SRBcv1 added nearly 1%, hot-rolled coil SHHCcv1 advanced about 0.9%, wire rod SWRcv1 rose 0.5%, and stainless steel SHSScv1 ticked up almost 0.2%.
($1 = 7.2496 Chinese yuan)
Reporting by Gabrielle Ng; Editing by Subhranshu Sahu
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