Monday, 16 March 2015 13:26
SINGAPORE: Shanghai rebar futures rose to their highest in over a week on Monday and Dalian iron ore cut losses as Chinese equities rallied after Premier Li Keqiang said the government had enough tools to spur a slowing economy.
Key Chinese stock indexes closed at their highest levels since 2009 after Li said on Sunday that China had plenty of room to manoeuvre its policy and boost its economy having avoided using strong, short-term stimulus in recent years.
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Li’s comments suggest Chinese authorities can do much more to further growth, improving the outlook for steel demand in the world’s top consumer.
Last year, China’s steel consumption shrank for the first time in three decades.
The most-traded rebar for October delivery on the Shanghai Futures Exchange closed up 0.8 percent at 2,520 yuan ($ 402) a tonne, just off the session high of 2,524 yuan.
The September iron ore contract on the Dalian Commodity Exchange ended 0.2 percent lower at 457 yuan per tonne, but bounced off an intraday trough of 450 yuan.
“Confirmations China would offer fresh stimulus measures should support sentiment (towards bulk commodities),” ANZ Bank said in a note. On the Singapore Exchange, the April iron ore contract was up 0.7 percent at $ 57.16 a tonne by 0721 GMT after falling to as low as $ 56.10.
Iron ore prices have been hurt by a global glut that nearly halved the steelmaking raw material’s value last year and slashed it by another 18 percent this year.
The weaker market is hitting traders that sell iron ore cargoes to China from smaller suppliers such as India particularly hard.
“Business is very dull right now. We’re seeing almost no exports from India with prices at these levels,” said a Shanghai-based trader.
Steep export taxes and freight charges make it unviable for Indian iron ore producers to sell overseas.
India used to be the world’s No. 3 iron ore supplier until court-imposed mining and export curbs from 2010 aimed against illegal mining in key states constricted supply, leading to increased Chinese business for bigger suppliers Australia and Brazil. Some of those curbs have since eased but the costs have kept exports unprofitable.
Iron ore for immediate delivery to China stood at $ 58.10 a tonne on Friday, up 0.4 percent, according to The Steel Index (TSI). The benchmark hit $ 57.70 last Wednesday, the weakest since TSI began publishing prices in late 2008.
-Reuters
Copyright Reuters, 2015
