MANILA: China’s iron ore futures surged on Tuesday, with the benchmark Dalian price of the key steelmaking ingredient scaling a two-week high, after data showed factory activity in the world’s biggest steel producer unexpectedly expanded in February.
The official manufacturing Purchasing Manager’s Index remained above the 50-point mark last month, pointing to some resilience in the world’s second-largest economy despite downward pressure and global uncertainty amid the Russia-Ukraine conflict.
The China market bounce was broad-based, with other ferrous materials also advancing following fresh pro-growth rhetoric from Beijing ahead of the annual Two Sessions meeting of its top legislative body beginning March 5, during which it will unveil economic targets for the year.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange rose as much as 5.3% to 736 yuan ($116.60) a tonne, its highest since Feb. 15, and following a 12.4% slump over the whole month of February.
On the Singapore Exchange, iron ore’s front-month April contract advanced by as much as 5.4% to $149.65 a tonne. Chinese Commerce Minister Wang Wentao said in a media briefing on Tuesday that China saw some recovery momentum in consumption last month, and must “do everything possible” to spur consumption this year.
“We believe the Chinese government could try to achieve both of its main aims by building ‘green’ infrastructure, which both reduces carbon emissions and drives economic growth,” said Iris Pang, ING chief economist for Greater China, on what to expect from the Two Sessions. “In terms of monetary policy, we expect the government to describe its approach as ‘proactive and flexible’. In other words, China remains in easing mode,” she said in a note.
Construction steel rebar on the Shanghai Futures Exchange ended the morning trade up 2.8%, while hot-rolled coil climbed 3.7%. Stainless steel ticked up 0.3%. Dalian coking coal rose 4.5% and coke jumped 4.4%.
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