Iron ore futures climbed on Monday as renewed prospectsof further fiscal stimulus from China following a key government briefing lifted sentiment in the top consumer’s steel market.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade1.97% higher at 800.5 yuan ($113.08) a metric ton, after jumping more than 3% earlier in the session.
The benchmark November iron ore SZZFX4 on the Singapore Exchange was 1.4% higher at $107.7 a ton, as of 0715 GMT.
Steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar SRBcv1 and hot-rolled coil SHHCcv1 strengthened about1.36%, wire rod SWRcv1 added 0.96% and stainless steel SHSScv1 ticked 0.32%higher.
China on Saturday pledged a new package of incremental fiscal policies, which lifted sentiment across various commodities markets, including steel, said Chinese consultancy Mysteel.
With steel product prices propped up, the number of integrated steel mills in China finally earning profits on steel sales rapidly increased, leading the average operational rate among 87 steelmakers to climb by 1.85 percentage points during Oct. 4-11, Mysteel added.
However, signs of deflation in the country anda lack of clarity on its stimulus measures clouded its demand outlook.
China’s consumer inflation unexpectedly eased in September, while producer price deflation deepened, heightening pressure on Beijing to roll out more stimulus measures quickly to revive the flagging demand and shaky economic activity.
Beijing on Saturday said there will be more “counter-cyclical measures” this year, but left investors guessing on the size and timing of the stimulus being prepared.
“Absent of stimulus, the deflation threat is clearly growing, but if we have a strong enough fiscal stimulus push, it should be sufficient to ensure this weakness is clearly short-lived”, said ING analysts.
“The signalling remains positive and we expect more details in the coming weeks and months.”
Other steelmaking ingredients on the DCE were stronger, with coking coal DJMcv1 and coke DCJcv1 up 1.83% and 2.35%, respectively.
Source: Reuters
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