Iron ore prices start to improve on expectations that China will have a package to support the real estate industry

According to Reuters, the price of iron ore futures rose on Wednesday (June 7), hovering near a seven-week high. Traders are expecting more policy stimulus from China amid the trade gloom.

The September iron ore contract on China's Dalian Commodity Exchange was up 0.6 percent at 774 yuan ($108.75) a tonne.

On the Singapore Exchange, the July iron ore contract for the steelmaking material rose 1.3% to $107.8 a tonne, near a seven-week high of $108.4.

Speculation since late May about China's rollout of additional measures to revive its struggling real estate sector and boost domestic demand has lifted iron ore prices by around 10% in June. .

The price of steel bar as of June 8 on the Shanghai Commodity Exchange was at 3,652 yuan/ton, up 0.6% from the end of the previous session, the highest level in 3 weeks. From the beginning of June until now, the price of steel bars has increased by about 6%.

Several Chinese media outlets have quoted policy advisers and economists as saying the country is likely to continue cutting interest rates by banks in the second half of this year to support the economy.

“Markets tend to lean on hopes of a stimulus package when macro indicators from China disappoint,” said Citi Group analysts.

However, such hopes "could be misplaced without effective measures to revive the economy".

Given the recent disappointing macro indicators, a key question remains whether Beijing has felt enough pain and is ready to move from spontaneous recovery to recovery, the Citi analysts added. recovered by stimulation or not”.

According to CNBC, China's exports in May fell 7.5% year-on-year to $283.5 billion, a much larger drop than the previous forecast for a 0.4% decline. At the same time, this is the first month since February that recorded negative growth in exports, raising concerns about the outlook for the world's second-largest economy.

Imports iron ore increased in May thanks to improved profit margins of steel companies

China's iron ore imports in May rose 4% year-on-year to 96.18 million tonnes, according to data from customs.

The data showed that the May volume was also higher than the 90.44 million tons imported in April. The 1-day average steel output at blast furnaces in May was  2.4 million tons, up 0.6% y/y. same period last year and nearly 9% higher than the level at the beginning of this year.

Steel margins improved thanks to a sharp drop in raw material prices, which also encouraged mills to buy more raw materials.

The most-traded September iron ore futures on the Dalian Commodity Exchange fell 1.7% in May, while coking coal fell 12.2% and coke died 11.6%. However, by June, iron ore prices tend to increase again as mentioned above.

Meanwhile, rebar price decreased by 6.4% and hot rolled coil decreased by 4.8%. Mysteel data showed that profits for surveyed steel mills rose to 34.2% at the end of May, from 26.41% at the end of April.

“The slow economic recovery in countries, may have encouraged miners to ship more commodities to China,” said Cheng Peng, an analyst at Beijing-based Sinosteel Futures. Country".

Iron ore imports in the first five months of this year totaled 481 million tonnes, up 7.7% year-on-year, according to customs.

Customs data showed that China's exports of steel products in May rose 7.7% year-on-year to 8.36 million tonnes, the highest since September 2016. This is also higher than 7.93 million tons in April.

Vietnambiz