Iron ore futures jump on recovering steel production

Iron ore and steel prices continued to gain ground in overnight trading, among signs of steady steel output globally and stockpiles in Chinese markets.

Global production of steel declined by 0.1% year-on-year in May, according to worldsteel data released on Tuesday and referenced by analysts at Macquarie.

However, while that marked the 17th consecutive month of contraction it also pointed to a “decent recovery” from January’s 6.7% drop in production, the Australian broker went on to explain.

World output of steel reached 1,638m metric tonnes per annum in May.

September iron ore futures on the Dalian Commodities Exchange jumped 3.5% to 386.5 yuan a tonne by the Wednesday close – having hit an intra-day and five-week high of 388 yuan a tonne.

Total inventories of five steel products were unchanged in June at 8.126m tonnes in comparison to a month ago, the China Iron & Steel Association said on Monday.

The most active rebar futures, for October delivery, on Shanghai’s Futures Exchange rose by 2.8% to 2,143 yuan ($325.27) a tonne by the close of trading on Wednesday – its highest since 14 June – according to Reuters.

As of 12:00 BST three-month copper futures were up by 1.4% to $4,670 per metric tonne on the LME.