June 27 (Bloomberg) -- Iron ore posted the biggest weekly advance since August, as renewed economic optimism in China, the biggest user, countered concerns of an expanding seaborne glut.
Ore with 62 percent iron content delivered to the port of Tianjin advanced 3 percent this week, the most since the period ended Aug. 16, according to data compiled by The Steel Index Ltd. It retreated 0.4 percent to $94.90 a dry ton today. The raw material, which dropped below $90 last week for the first time since 2012, is set for its first monthly increase this year.
A Chinese manufacturing index released this week showed that factory activity for Asia’s biggest economy rose to a seven-month high in June, supporting Premier Li Keqiang’s contention that the economy will avoid a hard landing as the government steps up efforts to spur growth. Iron ore tumbled 29 percent this year as mining companies from Brazil’s Vale SA to BHP Billiton Ltd. in Australia boosted output, betting that rising exports to China would more than offset lower prices.
“China’s PMI and hopes for an improvement in demand led to higher prices this week,” Ian Roper, an analyst at CLSA Ltd., said by e-mail. “Prices will be stuck in a range of $85 to $95 for most of the second-half. We’re more likely to see $80 than $100, but still don’t expect $80 until next year.”
Futures for July settlement slid 1.6 percent to $95.78 a ton on the Singapore Exchange by 2:58 p.m. local time, paring this week’s gain to 3.1 percent.