Australia's iron ore (62% Fe, CFR China) on July 11 hiked by US$0.4 to US$98.5, which extended its rally to reach a new one-and-a-half-month high since May 26. Over the past week, prices jumped by US$3.3, or 3.46%. Since the beginning of July, iron ore has advanced by a total of US$4.95, with the cumulative increase widening to 5.29%.

Driven by a series of pro-growth measures introduced by Chinese authorities, sentiment in the steel market improved, leading to a continued rise in steel prices. Meanwhile, reduced shipments from major iron ore suppliers tightened supply, and iron ore inventories at Chinese ports declined by more than 100 million tons last week, lending further support to the upward momentum in iron ore prices.

Industry sources noted that although seasonal demand remained subdued, and hot metal output shifted from growth to decline, steelmakers are still maintaining reasonable profit margins. As a result, the decline in hot metal production may be limited. In the near term, the rebound in steel prices is expected to persist, with iron ore likely to trade within a high and volatile range.