Iron ore futures traded higher on Wednesday as renewed interest in negotiations to end the Iran war lifted market sentiment for metals, with a ceasefire expected to restore Middle Eastern demand for Chinese steel.

The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) traded 0.53 per cent higher at 760.5 yuan ($111.51) a metric ton, as of 0246 GMT.

The benchmark May iron ore on the Singapore Exchange was trading up 0.24 per cent at $103.75 a ton.

Renewed interest in peace talks to end the Middle East conflict has sparked a rally in metals.

The war has disrupted trading flows through the Strait of Hormuz, leading to lower shipments to the Gulf, which consequently resulted in the annually lower steel shipments in March, said Zhuo Guiqiu, an analyst at Jinrui Futures.

The Gulf was China's second-largest steel export destination last year, accounting for some 16 per cent of China's record-high steel exports, as other countries put up trade barriers.

Talks to end the Iran war could resume in Pakistan over the next two days, U.S. President Donald Trump said on Tuesday, after the collapse of weekend negotiations prompted Washington to block shipping traffic to and from Iran's ports.

In China, iron ore demand currently remains close to peak levels, providing strong support for iron ore prices, a note from Shanghai Metals Market said.

Global crude steel demand is forecast to rise by 0.3 per cent this year to 1.72 billion metric tons, the World Steel Association said on Tuesday.

Other steelmaking ingredients on the DCE advanced, with coking coal and coke up 1.6 per cent and 2.56 per cent, respectively.

Due to rising hot metal output, coking coal and coke demand was strong, with steel mills having relatively low coke inventory levels, leading to urgent procurement of coke cargoes, a separate note from Shanghai Metals Market said.

Steel benchmarks on the Shanghai Futures Exchange mostly gained:

Rebar up 0.23 per cent, hot-rolled coil climbed 0.3 per cent, and stainless steel lifted 1.89 per cent. In contrast, wire rod lost 0.12 per cent.

Source: ET Infra. Com 

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