Rio Tinto posts stronger-than-expected iron ore output

* China March crude steel output slips 1.7% yr/yr

* China posts first GDP decline on record

By Enrico Dela Cruz

MANILA, April 17 (Reuters) – Dalian iron ore futures rose to their highest in more than eight months on Friday, and were on course for their second consecutive weekly gain, after miner Rio Tinto said Chinese demand for the steelmaking raw material continues to recover.

Prices were also buoyed by hopes of a stimulus package from Beijing in the near term to prop up the coronavirus-ravaged Chinese economy.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange rose 2.9% to 621.50 yuan ($87.86) a tonne in early trade, its highest since Aug. 5 last year. The front-month May contract on the Singapore Exchange gained 1.9%.

Rio Tinto Ltd , the world’s top iron ore miner, retained its annual output guidance for the steelmaking ingredient and said it was on track with projects for replacement tonnes despite coronavirus-led disruptions.

The Anglo-Australian miner boosted its first-quarter iron ore output, saying demand from Chinese steel mills, particularly for the top-grade material, was strong despite coronavirus containment measures.

Iron ore trimmed gains, however, after the release of China’s GDP and industrial production data, which painted a grim picture of the world’s second-biggest economy in the wake of the coronavirus outbreak.

China’s gross domestic product shrank for the first time since at least 1992 in the first quarter, contracting by 6.8% year-on-year, but the National Bureau of Statistics said China’s economic performance in the second quarter is expected to be much better.

“Markets are starting to look to what the medium- to long-term outlook might be, as the pandemic comes under control,” commodity strategists at ANZ wrote in a note.

“For commodity markets, the focus will remain on China, the biggest consumer of most commodities. As such, the re-starts of industrial activity should kickstart commodity demand,” they said.

FUNDAMENTALS

* Spot iron ore prices have also risen this week, with the benchmark 62% material bound for China settling at $86.50 a tonne on Thursday, based on data from SteelHome consultancy, the highest since March 27. SH-CCN-IRNOR62

* Construction steel rebar was virtually flat on the Shanghai Futures Exchange, as of 0258 GMT, while hot-rolled coil, used in cars and home appliances, rose 0.2% and stainless steel advanced 0.5%.

* Shanghai rebar’s most-traded October contract rose to its highest since March 18 in early trade, while HRC also hit a four-week peak, before data showed a 1.7% year-on-year drop in China’s steel output in March.