Prices of iron ore futures extended gains into a third straight session on Thursday, after top consumer China’s pledge for more stimulus injected further confidence just as the last wave of monetary easing-led frenzy faded.
The benchmark October iron ore on the Singapore Exchange jumped by 2.49% to $98.8 a metric ton, as of 0748 GMT.
It hit an intra-day high at $99.25 a ton, approaching the key psychological level of $100 a ton the second time this week.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) surrendered earlier losses to end daytime trading 1.75% higher at 728 yuan ($103.73) a ton.
Chinese leaders pledged on Thursday to deploy “necessary fiscal spending” to meet this year’s economic growth target of roughly 5%, in a move that surprised the market.
This came after Beijing unveiled on Tuesday a raft of aggressive monetary stimulus, including broad rate cuts and lower down payment to bolster the faltering economy and restore confidence.
The measures have boosted sentiment in the broad commodities market, including iron ore, the price gains of which fully erased losses recorded in September.
High portside stocks and falling demand after steelmakers scaled back production amid losses had led to prices of the key steelmaking ingredient slumping nearly 10% as of Monday.
Other steelmaking ingredients on the DCE gained ground, with coking coal DJMcv1 and coke DCJcv1 adding 2.44% and 2.2%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar SRBcv1 rose 1.05%, hot-rolled coil SHHCcv1 ticked 0.66% higher while wire rod SWRcv1 fell 4.79%, and stainless steel SHSScv1 inched down 0.07%.
“Prices largely consolidated due to mounting upside pressure, as persistently rising steel prices triggered expectations of rapid increase in supply,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.
“That could create another mismatch between supply and demand at a time when downstream steel consumption remains tepid.”
Source: Reuters