Futures of the steel-making ingredient were on course for a second weekly gain as prices rose back above $96 a ton. Beijing’s top leaders this week vowed to curb outdated industrial capacity, which could boost prices of raw materials due to the potential positive impact for steel-mill margins.
Analysts at Citigroup Inc. see the signals from China as a likely precursor for so-called supply-side reform 2.0. However, compared with 2015 to 2018, they see a less aggressive capacity cut, and a limited follow-up of demand measures, according to a research note.
Iron ore has lost about 15% over the past year as the economy in China — the world’s biggest consumer — continues to struggle. Demand prospects have also been dampened by ample supplies from Australia and Brazil, the top shippers.