The price of iron ore, the main ingredient for steel production, has risen for the fifth consecutive week as China’s efforts to revive its property sector boosted steel demand in the world’s largest consumer.

 

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed at 986.5 yuan ($136.80) a metric ton on Friday, up 0.61% from the previous day. The benchmark December iron ore on the Singapore Exchange climbed 0.88% to $134.35 a ton, following a slight drop on Thursday.

 

The iron ore market has been resilient despite the recent intervention by China’s state planner, which said it would closely monitor changes in the market and further tighten supervision of spot and futures trading. The move was aimed at curbing the price rally, which has been driven by supply constraints and strong demand.

 

However, the market sentiment was lifted by the news that China may allow banks to offer unsecured short-term loans to qualified property developers for the first time, according to Bloomberg News. This came after Chinese regulators reportedly drafted a list of 50 real estate developers eligible for funding.

 

The property sector is the largest steel consumer in China, accounting for about 30% of the total demand. The easing of credit restrictions for developers could stimulate the demand for steel and iron ore, as well as support the economic recovery.

 

The iron ore price rally has also benefited from the supply disruptions in other steelmaking ingredients, such as coking coal and coke. Some coal mines in Lvliang city in north China’s Shanxi province, its top coal production hub, temporarily suspended production due to intensified safety checks, consultancy Mysteel said. This has fanned concerns about reduced supply in the near term.

 

The higher raw materials costs have pushed up the steel prices on the Shanghai Futures Exchange. Rebar, hot-rolled coil, wire rod and stainless steel all gained on Friday.

 

The strong iron ore price has been a boon for the major exporters. The higher price has also encouraged the import of iron concentrate, which is a processed form of iron ore with higher iron content and lower impurities. Iron concentrate can help reduce the emissions and energy consumption of steel production, as well as improve the quality of steel products.

 

According to the China Iron and Steel Association, China imported 1.17 billion tons of iron ore. Among them, 254 million tons were iron concentrate. The import of iron concentrate has helped China diversify its sources of iron ore and reduce its reliance on the traditional suppliers.

 

The outlook for the iron ore market remains positive, as China’s steel demand is expected to remain robust in the coming months. The iron ore price is likely to stay above $100 a ton in the near term, according to some analysts. The import of iron concentrate will also continue to increase, as China seeks to improve its steel industry and reduce its carbon footprint.