MANILA: Chinese iron ore and steel futures edged higher on Wednesday on optimism that surging Covid-19 infections in the country would prompt stimulus measures to shore up the world’s second-largest economy.
Top steel producer China will likely map out more stimulus steps to underpin growth next year and ease disruptions caused by the relaxation of Covid-19 curbs, Reuters reported citing policy insiders and analysts.
The most-traded iron ore for May delivery on China’s Dalian Commodity Exchange ended a volatile morning trade 0.6% higher at 802.50 yuan ($115.31) a tonne.
Rebar on the Shanghai Futures Exchange rose 0.5% to 3,950 yuan a tonne. Iron ore prices were propelled to six-month highs recently due to an improving outlook for the Chinese economy in the wake of Beijing’s pivot from its zero-COVID policy and measures to support ailing property developers.
“We believe that more accommodative policies with respect to Covid and property markets will lead to stability in demand for iron ore,” Jefferies analysts said in a Dec 13 note. However, China’s sudden shift in its COVID containment strategy has led to a surge in infections, spurring investor caution. Benchmark January iron ore on the Singapore Exchange was down 0.9% at $107.90 a tonne, as of 0400 GMT.
“The virus is rapidly spreading through households and offices and starting to put pressure on the hospital system. This could further weigh on consumer and industrial activity in the short term,” ANZ commodity strategists said in a note.
That surge has reportedly prompted Chinese authorities to delay an annual Central Economic Work Conference, scheduled to begin on Thursday, at which leaders were expected to discuss growth targets and the potential for more monetary easing.
Both Shanghai hot-rolled coil and Shanghai stainless steel rose 0.4%, while Dalian coking coal and Dalian coke climbed 2.3% and 0.5%, respectively.
Source: Brecorder
