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Iron ore prices advance on bullish China’s demand

07:31, 22 December 2021

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A large steel mill in Shanghai, China
A large steel mill in Shanghai, China – Photo: Shutterstock

Iron ore prices eased on Wednesday but remained firm on expectations that Chinese steel producers may step up imports following robust import data and favourable macro economic policy.

The January contract for iron ore futures on the Singapore Exchange fell 1.22% at $125.75 per tonne on Wednesday. The steel-making ore closed 2.2% at $127.30 on Tuesday and about 35.5% higher from around $86/tonne level in November. 

The price gained after China’s central bank cut interest rates and started to increase its purchase of Australian iron ore, said Jessica Amir, Australia market strategist at Saxo Bank, in a note on Wednesday.

China imports

Spot iron ore price was steady at $113.64/tonne on Tuesday, while iron futures on the Dalian Future Exchanges advanced 4.23% to CNY702 ($110.19) a tonne.

Robust data on China’s iron ore imports and industrial production growth also helped sustain the price, according to economic data provider, Trading Economics. 

US100

11,447.90 Price
+0.010% 1D Chg, %
Long position overnight fee -0.0142%
Short position overnight fee 0.0043%
Overnight fee time 21:00 (UTC)
Spread 1.5

BTC/USD

20,042.60 Price
-0.260% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 21:00 (UTC)
Spread 60.00

XRP/USD

0.49 Price
-1.750% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 21:00 (UTC)
Spread 0.00600

Natural Gas

6.88 Price
-0.680% 1D Chg, %
Long position overnight fee -0.1544%
Short position overnight fee 0.1122%
Overnight fee time 21:00 (UTC)
Spread 0.005

China imported 104.96 million tonnes of iron ore and concentrates in November, surging 14.5% from 91.61 million in October, according to the country’s customs agency. November imports were the highest in 16 months according to Trading Economics.

Resume purchase 

Steel blast furnaces in the east, northeast, southwest and northwest of China have partly resumed their production after fulfilling their crude steel output control target, leading to more purchase, according to Shanghai Metals Market on Tuesday.

As many as 67 ships arrived at main ports in China in the week of 13 to 19 December with estimated volume at 9.9 million tonnes, up 0.7 million tonnes from the previous week. 

However, Saxo Bank’s Amir said it is likely to curb steel production and buying of iron ore ahead of the February Winter Olympics to reduce emissions.

Read more: Copper gains for second day on positive outlook, tight supply

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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