China iron ore jumps 5 pct as steel races to 3-yr high
Iron ore futures in China surged more than 5 percent on Wednesday as steel prices rose to their strongest in more than three years on hopes of firm demand as Beijing spurs infrastructure spending and property sales rise.
This week marks a sharp recovery for iron ore that could help pull the spot price further away from a one-month low if Chinese steel futures sustain their upward momentum.
China’s fixed-asset investment grew 8.9 percent in January and February from the same period last year, largely due to strong property and infrastructure construction, outpacing the 8.1 percent pace for all of 2016.
“We continue to believe that China will look to infrastructure investment in 2017 to drive growth as China’s top leaders prepare for elections in November,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
The most-active rebar on the Shanghai Futures Exchange rose as far as 3,692 yuan ($534) per tonne, its highest since February 2014. It was up 2 percent at 3,656 yuan by 0323 GMT.
Iron ore on the Dalian Commodity Exchange was up 5.5 percent at 724.50 yuan a tonne, having touched a two-week peak of 730.50 yuan earlier.
Strong growth in property sales and real estate investment in the past two months also gave the market hope that property construction could increase again, Dhar said.
“While we think it is unlikely that China’s property sector will remain a tailwind to Chinese steel consumption this year, it would certainly provide upside risk to our commodity price forecasts.”
China’s Premier Li Keqiang said on Wednesday the world’s second-largest economy faces domestic and external risks this year, but added that the country has many policy tools to cope with them. He also said this year’s economic growth target of around 6.5 percent will not be easy to meet.
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB was little changed at $88.14 a tonne on Tuesday, according to Metal Bulletin, not far above a one-month low of $86.72 reached on March 10.
Source: Reuters (Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)