SINGAPORE: Dalian iron ore futures prices surged to their highest in two months on Tuesday after Beijing eased its monetary policy stance for the first time in over a decade, spurring bets of further stimulus to boost the top consumer’s economic growth.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 2.74% higher at 824.0 yuan ($113.69) a metric ton, its strongest level since Oct. 8, as of 0255 GMT.
The benchmark January iron ore on the Singapore Exchange climbed 1.05% to $106.4 a ton. China will adopt an “appropriately loose” monetary policy next year, the first easing of its stance since late 2010, the Politburo was quoted as saying on Monday.
Iron ore jumped on the Politburo news, as authorities’ promise to “effectively prevent and defuse risks in key sectors to ensure no systematic risks rise” was taken as a sign of further moves to stabilise the property market, Westpac analysts said in a note. The statement also called for more proactive fiscal policy and “extraordinary countercyclical adjustments to boost consumption forcefully”, said ANZ analysts.
“These point to strong fiscal expansion, big rate cuts and asset buying, which will support growth and, in turn, metals demand,” the ANZ analysts said. The Politburo’s meeting comes as government advisers are recommending keeping China’s growth target unchanged next year, but also calling for more forceful fiscal stimulus to mitigate the impact of expected US tariffs and to fend off deflationary pressures.
Beijing’s firmer tone on stimulus sets the scene for the Central Economic Work Conference, scheduled on Wednesday, which will more firmly set out policy priorities and objectives including the annual growth goal, Westpac said.
Other steelmaking ingredients on the DCE spiked, with coking coal and coke up 3.04% and 4.52%, respectively. Steel benchmarks on the Shanghai Futures Exchange climbed. Rebar advanced 3.1%, hot-rolled coil strengthened 2.53%, wire rod gained 2.23% and stainless steel added nearly 0.7%.
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