Iron ore extends rally on China demand hopes
Iron ore futures advanced on Friday and were set for their third straight weekly rise, as top steel producer China’s latest moves to shore up its flagging economy brightened demand prospects.
Expectations that Beijing will take more policy actions to support the economy, after easing some of its strict COVID-19 containment rules and unveiling fresh measures to aid an ailing property sector, added to the buoyant mood.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 3.3% higher at 753.50 yuan ($105.76) a tonne. Earlier in the session, it hit the highest level since Aug. 1 at 757.50 yuan.
“(China’s) stimulus policies have pushed up price expectations for iron ore,” Huatai Futures analysts said in a note.
China should set its economic growth target no lower than 5% for 2023, Liu Shijin, a policy adviser to the People’s Bank of China (PBOC), said on Friday, supporting Beijing’s pro-growth stance.
On the Singapore Exchange, benchmark December iron ore SZZFZ2 was up 2.1% at $98.95 a tonne, as of 0709 GMT.
China has fine-tuned its zero-COVID strategy, which has caused significant economic damage, even as the number of new infections is surging.
“Looser quarantine rules suggest an end to the restrictions is closer than we thought,” ANZ commodity strategists said in a note.
Projecting a “softer landing” now for the Chinese property sector, ANZ has increased its forecast for China’s 2023 steel output to 1.05 billion tonnes from 1.01 billion tonnes, and expects the iron market to remain in deficit.
Chinese steel benchmarks and other steelmaking inputs also stretched weekly gains on Friday.
Rebar on the Shanghai Futures Exchange rose a further 0.3%, while both hot-rolled coil and wire rod climbed 0.8%. Stainless steel dipped 0.8%.
Dalian coking coal and coke rose 2.1% and 1.2%, respectively.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)