SINGAPORE: Iron ore futures prices surged on Wednesday, as a fresh batch of policy easing measures from top consumer China lifted market sentiment, while lower global supply also lent support.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 6.32% higher at 723.5 yuan ($103.11) a metric ton.
The benchmark October iron ore on the Singapore Exchange was 3.23% higher at $97.8 a ton, as of 0330 GMT.
Iron ore futures rallied on hopes the measures to support the Chinese real estate market would turn around its fortunes, ANZ analysts said in a note.
The stimulus announcement boosted sentiment across domestic ferrous commodities markets, spurring a strong uptick in prices of imported iron ore on Sept. 24, said Chinese consultancy Mysteel.
On Tuesday, China’s central bank unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk and back towards the government’s growth target.
The property market support package included a 50-basis-point reduction in average mortgage interest rates and a cut in the minimum downpayment requirement, among other measures.
However, analysts warned more fiscal help was vital to hit these goals.
“We have some doubts that gains will stick,” ANZ analysts said.
Although the stimulus measures should stop steel market conditions from worsening, they are unlikely to boost demand in the short term, as this year’s steel output remains on track to come in lower than 2023, ANZ added.
Iron ore recovers on fresh China stimulus, seasonal stockpiles
Meanwhile, the volume of iron ore shipments dispatched globally from 19 ports and 16 mining companies in Australia and Brazil dropped 4% week-on-week during Sept. 16-22, Mysteel said.
Other steelmaking ingredients on the DCE jumped, with coking coal and coke up 5.8% and 5.89%, respectively.
Steel benchmarks on the Shanghai Futures Exchange posted gains.
Rebar climbed 3.4%, hot-rolled coil advanced 3.03%, stainless steel added 2.16% and wire rod edged about 0.3% higher.