Iron ore surges to highest price since mid-2022

December 26, 2023 (MLN): Iron ore rallied to its highest since June 2022, showing Beijing’s efforts to stem the property market’s decline in recent months may be paying dividends, as Bloomberg reported.

Futures in Singapore rose above $140 a ton amid thin trading on Tuesday.

Optimism is building that China’s economic recovery and its steel-intensive property sector are finally gaining momentum, after a subdued post-pandemic reopening in the past year disappointed investors.

On Thursday, China’s biggest state-owned banks launched this year’s third round of rate cuts as authorities boost efforts to lift economic activity.

The salvo comes after Beijing in November announced a 1 trillion yuan ($127 billion) plan to boost urban revitalization, providing relief for the steel-intensive property sector amid a wave of developer defaults.

With heightened anticipation for better demand, steel mills that have depressed iron ore stockpiles to keep operations lean may now face restocking pressure should needs exceed supplies.

The recent weekly commercial housing transaction data showed positive improvement and bolstered bullish sentiment, said Atilla Widnell, managing director at Navigate Commodities Pte in Singapore.

“We maintain that Iron Ore futures should quite easily target $145-158 a ton at least by next quarter.” said Widnell.

Iron ore climbed 1.5% to $140.55 a ton at 12:58pm PST. Futures in Dalian were 1.3% higher, while steel rebar and hot-rolled coil both advanced in Shanghai.

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