Iron ore rebounds on soft dollar, hopes of better Chinese demand
BEIJING, Aug 26 (Reuters) -Iron ore futures prices rebounded on Monday, supported by a softer U.S. dollar and the prospect of steel demand picking up in the coming peak construction season in top consumer China.
The most-traded January iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 ended morning trade 2% higher at 740 yuan ($103.91) a metric ton.
The benchmark September iron ore SZZFU4 on the Singapore Exchange climbed 3.2% to $99.15 a ton, as of 0340 GMT.
The dollar =USD hovered near an eight-month low, after U.S. Federal Reserve Chair Jerome Powell's dovish remarks on Friday reinforced expectations of an interest rate cut in September.
A weaker dollar makes dollar-priced commodities less expensive for buyers using other currencies.
"The prospect of easing monetary policy boosted sentiment across the commodity complex," ANZ analysts said in a note.
A marginal improvement in fundamentals also supported prices of the key steelmaking ingredients, although more equipment maintenance conducted among Chinese steelmakers after losses widened remained a headwind, said analysts.
Supply-side pressure eased a bit with lower domestic output amid falling ore prices while expectations of improved downstream steel demand in the coming month beefed up, analysts at Sinosteel Futures said in a note.
Other steelmaking ingredients on the DCE recorded gains, with coking coal DJMcv1 and coke DCJcv1 up 0.9% and 1.47%, respectively.
Steel benchmarks on the Shanghai Futures Exchange strengthened. Rebar SRBcv1 advanced 1.57%, hot-rolled coil SHHCcv1 added 1.67%, wire rod SWRcv1 climbed 1.17% and stainless steel SHSScv1 rose 0.62%.
China started to temporarily halt its steel capacity replacement programme from Aug. 23 while working to revise the measures, in a move that's expected to limit capacity expansion.
($1 = 7.1217 Chinese yuan)
Reporting by Amy Lv and Mei Mei Chu; Editing by Rashmi Aich
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