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Iron ore climbs as China vows to prioritise economic development

Iron ore prices rose on Wednesday as Chinese regulators assured investors that economic development remained a priority, while vowing to keep the domestic currency and property markets stable.

People’s Bank of China Governor Yi Gang said China would be able to maintain normal monetary policy as he touted a resilient domestic economy, and expressed hopes for a soft landing in the ailing property sector.

The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 2.3% higher at 629 yuan ($86.50) a tonne, extending gains from Tuesday, when the steelmaking ingredient staged a technical rebound after October sell-offs.

On the Singapore Exchange, benchmark December iron ore was up 2.6% at $80.15 a tonne, as of 0708 GMT.

Iron ore’s advance also came after data showed iron ore exports by Brazil fell 13% in October from a year earlier.

Other Dalian steelmaking inputs also extended gains, with coking coal and coke up 2.7% and 2.1% respectively, even as optimism faded that top steel producer China would ease its strict COVID-19 rules.

On Tuesday, unverified social media posts had raised hopes that the world’s second-largest economy would relax its strict zero-COVID policy.

“These are just rumours at this stage. So, caution is warranted,” ING analysts said in a note.

Steel futures rose. Rebar on the Shanghai Futures Exchange gained 1.3%, hot-rolled coil climbed 1.7%, wire rod advanced 0.5%, and stainless steel added 0.3%.

Moody’s Investors Service expects a “modest growth recovery” for China in 202, but warned “a prolonged slowdown… would have large impacts on Northeast Asian economies that are exposed to Chinese demand for a range of goods”.

“In addition, commodity-producing countries such as Australia, Mongolia and to some extent Indonesia are more vulnerable,” it said, referring to China’s key suppliers of iron ore, coal and nickel.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Rashmi Aich and Subhranshu Sahu)

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