Singapore and Dalian iron ore futures rebounded on Tuesday as market sentiment improved after the central bank of the world’s top steel producer lowered a short-term lending rate for the first time in 10 months.
The announcement came after the Singapore benchmark retreated 3% on Monday following a near-15% rise over eight straight sessions amid of hopes that China would roll out a series of stimulus policies to revive its beleaguered property market.
The People’s Bank of China (PBOC) cut its seven-day reverse repo rate by 10 basis points to 1.90% from 2% on Tuesday as it injected 2 billion yuan through the short-term bond instrument.
Adding to the upbeat sentiment is also a Bloomberg News report that said, citing people familiar with the matter, China is considering a dozen stimulus measures to support areas including the property market, the largest steel consumer.
The move comes after a flurry of weaker-than-expected economic data in April and May.
The most-traded September iron ore on the Dalian Commodity Exchange (DCE) reversed the downtrend in the morning session and ended daytime trading 0.69% higher at 801.5 yuan ($112.10) a metric ton.
Meanwhile, other steelmaking ingredients likecoking coal and coke jumped 4.09% and 2.64%, respectively.
Rebar on the Shanghai Futures Exchange advanced 1.88%, hot-rolled coil added 1.77% and wire rod gained 3.16%.
“The recent rise in steel prices has helped to expand steel margins and encouraged blast-furnace-based steelmakers to restart operations,” analysts at Huatai Futures said in a morning note.
The fundamentals will only change after a steel output reduction policy is put into practice, they added.
China’s state planner is yet to make an official announcement in this regard.
Stainless steel lost 0.56%.