By Reuters

Copyright brecorder

SINGAPORE: Iron ore futures advanced on Friday and are set to end the week higher, buoyed by strengthening steel demand and pre-holiday restocking in major consumer China.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) rose 0.56 percent to 805.5 yuan (USD113.23) a metric ton, as of 0258 GMT. The contract is up 0.88 percent so far this week. The benchmark September iron ore on the Singapore Exchange was 0.22 percent higher at USD105.5 a ton, though it is down 0.19 percent for the week so far.

Steel demand is strengthening with the onset of the peak season, and restocking ahead of the Chinese National Day holiday is providing continued support to the ferrous metals sector. If downstream demand recovers more strongly than expected from late September to October, steel prices could see further gains, said broker Galaxy Futures.

According to data from consultancy Mysteel, China’s stockpiles of major carbon steel products declined 0.3 percent during September 12–18 from the previous week to 4.18 million tons.

Average daily hot metal output, an indicator of iron ore demand, reached 2.41 million tons in the week to September 19, up 171,900 tons from a year earlier, while blast furnace capacity utilisation rose by 6.29 percentage points year-on-year to 90.35 percent, according to data from Chinese financial information site Hexun Futures.

Top producer China’s crude iron ore production was up 8.8 percent year-on-year in August at 81.63 million tons, while crude steel output was down for a third month on slow demand, data from the National Bureau of Statistics showed.

Other steelmaking ingredients on the DCE eased, with coking coal and coke down 0.04 percent and 0.06 percent, respectively. Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar gained 0.32 percent, and wire rod climbed 0.12 percent, while hot-rolled coil fell 0.21 percent, and stainless steel dipped 0.27 percent.