China demand prospects lift iron ore in light pre-holiday trade
By Enrico Dela Cruz
Feb 8 (Reuters) - Iron ore futures rose on Monday, with China's benchmark contract extending a run of strong gains for a third session, buoyed by a positive demand outlook for the steelmaking ingredient in the world's top steel producer.
However, trading in iron ore spot and futures is expected to be light this week as China heads for a week-long Lunar New Year holiday, beginning on Thursday.
The most-traded May iron ore contract on China's Dalian Commodity Exchange DCIOcv1 advanced as much as 3.4% to 1,033 yuan ($159.96) a tonne in morning trade, its strongest level since Jan. 28.
Iron ore's May contract on the Singapore Exchange SZZFK1 climbed 2.7% to $147 a tonne, its highest level since Jan. 29.
China's appetite for iron ore remains strong despite seasonally-weak domestic demand for steel products, as imports likely rose sharply last month.
China's January iron ore imports reached 108 million tonnes, a gain of 18 million tonnes over December and 9 million tonnes from a year earlier, according to market intelligence firm Kpler.
"The trend of import strength is likely to continue into 2021, and whilst not all underlying data is positive for iron ore demand, China's manufacturing sector looks healthy," Kpler said in a note.
While China's factory activity grew at the slowest pace in five months in January, hit by a wave of domestic coronavirus infections, it remained in line with the ongoing recovery in the world's second-largest economy. nL1N2K600C
Rebar on the Shanghai Futures Exchange SRBcv1 rose 2.3% by 0330 GMT and hot-rolled coil SHHCcv1 jumped 3.1%, both also up for a third straight session. Stainless steel SHSScv1 gained 0.2%.
Coking coal DJMcv1 added 1.1% and coke DCJcv1 climbed 2.2%.
Spot iron ore in China traded at $157 a tonne on Friday, dropping from $159.50 a week earlier but recovering from an eight-week low of $150 touched on Feb. 2, SteelHome data showed. SH-CCN-IRNOR62
(Reporting by Enrico Dela Cruz in Manila; Editing by Devika Syamnath)