MANILA (Reuters) - China’s benchmark iron ore futures jumped to a record high in early trade on Thursday, rising along with the rest of the country’s ferrous complex on robust demand for the steelmaking feedstock amid tightening supply.
Steel prices were also higher, buoyed by expectations that downstream demand in the world’s top consumer will remain strong.
The most-traded September 2019 iron ore contract on the Dalian Commodity Exchange rose as much as 4.5% to hit 678.5 yuan ($98.62) a tonne.
“It’s because of some seasonal demand, which is quite strong, with some impact from the supply side,” said a Shanghai-based trader.
Steel mills were replenishing their iron ore stocks as good profit margins encouraged them to boost output, the trader said.
China’s crude steel production rose 12.7% in April from March to its highest monthly level on record, official data showed on Wednesday, bolstered by firm demand and good profitability.
The most-active construction steel rebar contract on the Shanghai Futures Exchange climbed 1.6% to 3,736 yuan a tonne, extending gains after it touched a five-week low earlier this week on concerns about the U.S.-China trade war.
Worries about the trade tensions have eased somewhat after the two countries’ tit-for-tat tariff war rattled financial markets in recent days.
U.S. Treasury Secretary Steven Mnuchin said on Wednesday he will likely travel to Beijing soon to continue negotiations as the world’s two biggest economies try to salvage talks aimed at ending their months-long trade war.
Hot rolled coil rose as much as 1.4% to 3,658 yuan a tonne.
Other steelmaking raw materials also extended gains, with coking coal up 1.4% at 1,369 yuan a tonne and coke up 2% to 2,153 yuan.
Reporting by Enrico dela Cruz; editing by Richard Pullin