The iron ore price surged Tuesday on expectations a
recovery in economic growth, including additional support from the Chinese
government, will boost demand for steel.
According to Fastmarkets MB, benchmark 62% Fe fines
imported into Northern China were changing hands for $146.13 a tonne, up 7.3%
from Monday’s closing.
The most-traded Dalian iron ore contract for January
2022 delivery jumped 6.2% to 817.50 yuan a tonne, bouncing off a 7-1/2-month low hit
on Friday.
Futures in Singapore rebounded as much as 10% as a
potential boost to the US vaccination drive
lifted sentiment across assets from stocks to base metals.
Separately, China’s central bank chief vowed to stabilize the
supply of credit and boost the amount of money supporting smaller businesses
and the real economy after both credit and economic growth slowed in
July.
In China, “people are hoping for some further
stimulus targeting the infrastructure sector, as real estate and manufacturing
are looking bleak,” said Erik Hedborg, principal analyst at CRU Group.
“In the rest of the world, we are seeing steel
production stabilizing at levels below pre-pandemic levels.”
Official data also shows that the Chinese economy is
slowing more generally, particularly in property and infrastructure.
“The infrastructure and property sectors account for
20-25% and 25-30% of China’s steel demand respectively,” noted
Commonwealth Bank commodities analyst Vivek Dhar.
Iron ore lost about a
quarter of its value over the past month, as China’s push to reduce steel
production hammered demand.
(With files from Reuters and Bloomberg)
Mining.com