Iron ore climbed for a third day on expectations that China’s government will bolster economic stimulus, as pre-Lunar New Year holiday restocking commences.
The steelmaking material rose as much as 1.2%, putting it on track for its highest close since June 2022. It’s been supported in recent weeks by signals from Beijing authorities that more stimulus could be on the way for the economy, and in particular the struggling property sector.
The Chinese central bank will continue cutting interest rates and banks’ reserve ratios this year, according to the chief economist at China Securities Finance Co., as reported by state-owned media. That echoed front-page Economic Daily commentary on Wednesday, which urged authorities to roll out more supportive economic policies.
The speculation comes after President Xi Jinping’s televised message on Sunday, in which he said that Beijing will “consolidate and strengthen the momentum of economic recovery, and work to achieve steady and long-term economic development.”
Expectations of further macroeconomic policies, coupled with the ongoing need for iron ore as mills move to winter stockpiling, continue to support prices for the material, said Huatai Futures Ltd. in a note.
Meanwhile, last year’s outperformance by Australian iron ore stocks should be repeated in the first half of 2024, with Chinese steel production expected to stay at high levels, according to a note by Citigroup Inc.
Iron ore futures in Singapore were trading 0.6% higher at $142.60 a ton at 12:32 PM local time. Futures in Dalian climbed 1.7%, while rebar and hot-rolled coil were little changed in Shanghai.
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