Iron ore prices rose on Monday after data showed a surprisingly robust pick-up in activity in China’s manufacturing sector and as steel demand outlooks remain bullish. The benchmark 62 percent grade of iron ore for delivery to China SH-CCN-IRNOR62 rose as much as 4.5 percent to $99.80 a tonne, its highest level since October 26, according to data from Metal Bulletin.
The rally came as data showed that China’s official manufacturing Purchasing Managers’ Index (PMI) rose to 51.2 in October from 50.8 in September, beating expectations of a dip to 50.6. The data also showed that output and new orders both expanded at the quickest pace in three months. The data helped to boost sentiment about steel demand in China, the world’s top producer, consumer and importer of the metal. Analysts have been expecting Chinese steel demand to remain relatively strong for the rest of the year, supported by government infrastructure spending.
The bullish outlook for steel demand has been further supported by the country’s growing exports, as well as by expectations that the government will take further steps to stimulate the economy if needed. This has raised hopes that iron ore prices may continue to rise in the near future.
