According to The Australian Financial Review today, iron ore climbed after steep losses in the previous session, with markets waiting for fresh Chinese economic data for clues on the state of demand in the world's top steel consumer.
Economic data in the coming weeks is expected to show the world's second-largest economy got off to a good start in 2017, with steady growth giving the central bank room to slowly tighten monetary policy and contain the risks from high levels of debt. Trade data is due on Friday.
The ferrous sector has come under pressure since the country launched a surprise short-term rate hike last week, boosting financing costs for holders of commodities, which are priced in dollars. Steel prices slid more than 5 per cent.
"We continue to feel that iron ore looks overbought and is due for a correction, especially as it looks more likely that China is interested in reining in things in given the short-term interest rate hike," said INTL FCStone in a report.
Late Tuesday, China reported that its foreign exchange reserves fell below $US3 trillion for the first time since February 2011, as the central bank intervened to support the yuan and capital flowed out of the country chasing higher returns.
Iron ore on the Dalian Commodity Exchange rallied 3.1 per cent to 625 yuan ($US91). Iron ore for delivery to China's Qingdao port rose 3.3 per cent to $US83.69 a tonne, according to Metal Bulletin.
"Iron ore spot prices threatened to push below $US80 a tonne after data showed another strong rise in inventories of iron ore held at Chinese ports," ANZ said in a note. China's iron ore stocks at ports hit a record high last week.
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