Iron ore rises after China’s central bank pledges monetary support

SINGAPORE: Iron ore futures extended their gains on Wednesday after the central bank in top consumer China pledged financial support to boost domestic demand, exemplified by lower-than-expected consumption data.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) was up 0.26% at 765 yuan ($110.63) a metric ton, as of 0234 GMT. The benchmark March iron ore on the Singapore Exchange was trading 0.17% higher at $100.35 a ton.

China’s central bank said late Tuesday it will step up financial support to boost domestic demand, as industrial overcapacity and lacklustre consumption weighed on business confidence and dampened growth outlook.

Still, the country’s consumer inflation cooled in January while producer price deflation persisted, reinforcing market calls for more policy measures to address the mismatch between supply and demand.

The consumer price index (CPI) increased 0.2% year-on-year, below the 0.4% rise projected in a Reuters poll.

Meanwhile, the producer price index (PPI) fell 1.4% year-on-year, extending a years-long deflationary trend and continuing to weigh on industrial firms’ profits, indicating the need for more policy measures to boost effective demand and address deep-rooted imbalance in the economy.

China relies on exports to absorb its production capacity, but a growing list of anti-dumping measures and trade rules in destination countries could derail the export-driven demand growth via strong Chinese steel exports.

With anti-dumping resistance hardening globally and China signalling tighter production discipline, export momentum is expected to fade into 2026, with total volumes expected to fall as much as 30% in 2026, according to an ANZ research report released on February 11.

Other steelmaking ingredients on the DCE softened, with coking coal and coke down 0.22% and 0.51%, respectively. Steel benchmarks on the Shanghai Futures Exchange advanced.

Rebar strengthened 0.26%, hot-rolled coil firmed 0.37%, wire rod hardened 1.42% and stainless steel gained 0.54%.