Iron ore futures rose on Thursday, with the Dalian benchmark hitting its highest in more than two weeks, buoyed by China’s intensified efforts to support the ailing domestic property sector.
Hopes that top steel producer China would ease its COVID-19 restrictions also boosted sentiment. Chengdu city said it would lift a full lockdown on Thursday in all districts still facing strict movement curbs with a recent outbreak now under control.
The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 0.7% higher at 722.50 yuan ($103.66) a tonne, after touching its highest since Aug. 29 at 736 yuan earlier in the session.
On the Singapore Exchange, the steelmaking ingredient’s benchmark October contract SZZFV2 was up 0.5% at $101.30 a tonne, as of 0700 GMT.
China’s zero-COVID policy and a downturn in the property industry have slowed down the world’s second-largest economy, with new home prices depressed by soft demand as widespread lockdowns dented already weak buyer confidence.
Guangzhou city has allowed property developers to reduce sale prices of homes by as much as 20% compared with 6% previously,financial newsoutlet Yicai reported.
“China has been stepping up its efforts to support the housing sector, with more Chinese cities announcing credit support and subsidies for home purchases,” ING commodities strategists said in a note.
Progress towards a resolution is being made, said Westpac senior economist Elliot Clarke, citing a proposed rescue fund for distressed developers announced in July.
“Along with other initiatives surely in the pipeline, these actions have the capacity to return liquidity and proper functioning to the construction sector and to rebuild confidence,” he said.
Dalian coking coal DJMcv1 and coke DCJcv1 advanced 3.6% and 3.1%, respectively.
Chinese steel futures, however, reversed early gains with rebar SRBcv1 and hot-rolled coil SHHCcv1 down 0.4% and 0.6%, respectively. Stainless steel SHSScv1 slipped 0.2%.