Dalian iron ore hits more than one-week high on renewed China stimulus hopes – Markets

SINGAPORE: Dalian iron ore futures climbed on Monday to their highest in more than a week, as renewed expectations of further stimulus from China overshadowed concerns about the top consumer’s faltering economic recovery and steel demand.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 2.35% higher at 783.5 yuan ($109.92) a metric ton.

The contract had earlier risen as much as 3.33% to 793.0 yuan, its strongest level since Oct. 17.

The benchmark December iron ore on the Singapore Exchange was 1.73% higher at $103.05 a ton, as of 0718 GMT.

Markets are now pricing in expectations of fiscal stimulus from China’s upcoming legislative meeting, said Atilla Widnell, managing director at Navigate Commodities.

Dalian iron ore climbs after 3-day slide

However, China’s finance ministry has “potentially mistakenly set expectations too high”, with markets incorrectly interpreting the meeting as Chinese government spending and fiscal support for domestic construction and infrastructure projects, Widnell added.

While steel demand from end-users remains lacklustre, prices of major steel products may stabilise and rebound this week on stimulus expectations, Chinese consultancy Mysteel said.

China’s top legislative body will meet from Nov. 4-8, but there was no mention on the agenda of highly anticipated debt and other fiscal measures.

Earlier today, the People’s Bank of China launched a new lending tool to inject more liquidity into the market and support credit flow, as the bank remains under pressure to do more to hit Beijing’s economic growth target of 5% this year.

Meanwhile, China’s September industrial profits plunged, recording this year’s steepest monthly decline, due to factors such as insufficient demand and a sharp decline in producer prices.

Other steelmaking ingredients on the DCE leapt, with coking coal and coke rising 4.14% and 4.61%, respectively.

Steel benchmarks on the Shanghai Futures Exchange advanced further. Wire rod jumped 4.12%, rebar and hot-rolled coil climbed about 2.65%, and stainless steel ticked 0.4% higher.