Dalian iron ore futures prices surged to their highest in two months on Tuesday after Beijing eased its monetary policy stance for the first time in over a decade, spurring bets of further stimulus to boost the top consumer’s economic growth.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade 1.87% higher at 817.0 yuan ($112.79) a metric ton, its strongest level since Oct. 8.
The benchmark January iron ore SZZFF5 on the Singapore Exchange ticked up 0.48% to $105.8 a ton by 0707 GMT.
China will adopt an “appropriately loose” monetary policy next year, the first easing of its stance since late 2010, the Politburo was quoted as saying on Monday.
Iron ore jumped on the Politburo news, as authorities’ promise to “effectively prevent and defuse risks in key sectors to ensure no systematic risks rise” was taken as a sign of further moves to stabilise the property market, Westpac analysts said in a note.
The statement also called for more proactive fiscal policy to “boost consumption forcefully”, pointing to big rate cuts and asset buying which will support growth and, in turn, metals demand, said ANZ analysts.
The policy shift countered the impact of softer customs data that on Tuesday showed China’s November exports slowed sharply while imports unexpectedly shrank.
In particular, iron ore imports fell 1.91% from October, as shipments slowed ahead of the slow season for steel demand when colder weather disrupts construction work in the country’s north.
Top Chinese policymakers are expected to meet this week at the Central Economic Work Conference to set priorities for the coming year, including their annual growth goal.
Other steelmaking ingredients on the DCE strengthened, with coking coal DJMcv1 and coke DCJcv1 up 0.74% and 3.1%, respectively.
Steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar SRBcv1 advanced 2.5%, hot-rolled coil SHHCcv1 strengthened nearly 1.9%, wire rod SWRcv1 gained 2.2% and stainless steel SHSScv1 added almost 0.7%.
Source: Reuters