Iron ore prices bounce to best in a week on upbeat seasonal demand outlook

Iron ore futures rose to the highest in more than a week on Thursday, as analysts said prospects of improved seasonal demand in China outweighed concerns for now over the country’s economic recovery.

The most-traded January iron ore contract (SCO:COM) on China’s Dalian Commodity Exchange ended daytime trading +3.9% at 707.0 yuan/metric ton ($99.25) after reaching an intraday high of 709 yuan/ton, its best level since September 3, and benchmark October iron ore on the Singapore Exchange recently was +1.9% at $94.55/ton.

Potentially relevant stocks include Rio Tinto (NYSE:RIO), BHP (BHP), Vale (VALE), Fortescue (OTCQX:FSUMF), Glencore (OTCPK:GLCNF) (OTCPK:GLNCY) and Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY).

“While China’s economy continues to face headwinds, we see pockets of growth that should provide some support to commodity markets,” ANZ analysts said, according to Reuters, adding that steel demand is expected to return to growth in 2025, as a rise in non-property sectors is helping offset the sharp drop in demand from the property sector.

Iron ore prices should find support at ~$85/ton from mining costs, Morgan Stanley analysts said, as reported by Dow Jones, as that level appears to be the cost curve’s 90th percentile, or marginal cost of production. There’s been increased focus on cost support after a fall in prices.

“In recent years, time spent near the 90th percentile has been contained in duration to [less than] 1-2 months,” although “cracks in Chinese demand may be deepening,” the analysts said, seeing “positive risk-reward to year-end” in iron ore markets, as supply growth slows and demand gets a boost from seasonal restocking.