Iron ore futures in Singapore rose to nearly $100 per ton — the highest level since May — following renewed commitments from the Chinese government to address overcapacity in key industrial sectors. Beijing’s statements have bolstered sentiment in the ferrous markets.
Singapore futures surged by up to 3.6% during the trading session, marking the largest daily increase since September. Iron ore futures have remained within a narrow range of $90 to $110 per ton for over 18 months. Meanwhile, futures on the Dalian Exchange, which are more impacted by the Chinese market, closed at their highest point since April.
“Iron ore has seen a more than 5% increase in the past two weeks, recovering a third of the losses incurred earlier in the year due to tariffs in just the last 10 sessions. Lead has also risen by almost 4% in the last three weeks,” mentioned UBS analyst Simon Penn in a statement.
“Numerous industries are currently grappling with anti-overcapacity measures, leading to price hikes,” stated Steven Yu, a researcher at Mysteel, as quoted by Bloomberg. He referred to the nearly 10% decline in iron ore prices since mid-May. Yu pointed out that “ferrous prices remained low during the previous slump, making the rebound particularly robust.”
Further insights from Bloomberg:
The rebound has been spurred by commitments from the Chinese government to address excessive competition and supply in key industries like steel. President Xi Jinping recently visited a valve manufacturer in Shanxi province, emphasizing the importance of traditional industries and the need to support them.
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This renewed demand is also evident in Dalian coking coal futures — a crucial component in steel production — which surged over 4.5% on Thursday, surpassing 900 yuan ($125.40) per ton, the highest level since May, before retracing some gains.
Additionally, data from Mysteel indicates that rebar steel inventories continue to decline, despite the usual trend of accumulation at this time of year. Hot-rolled steel inventories have only seen a slight increase, suggesting stronger-than-anticipated demand.
On a separate note, rumors of policy support have driven up Chinese property equities in overnight trading. The Bloomberg Intelligence index for the country’s real estate stocks soared by 11%, while Goldman’s China-H Real Estate basket climbed by 7.4%. Individual stocks like Logan Group Co. surged by 85% in Hong Kong, and Sino-Ocean Group Holding Ltd saw a 37% increase.
It seems that Beijing is taking more decisive policy actions to stabilize the economy, potentially signaling a move to quell growing economic dissatisfaction.
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