Iron ore rises as China property support counters Covid worries
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IRON ore prices rose on Friday (Jan 6) on optimism around China’s stepped-up policy support for the ailing domestic property sector, but persistent worries about local Covid-19 outbreaks kept the steelmaking ingredient on track for a weekly fall.
The most-traded May iron ore on China’s Dalian Commodity Exchange ended daytime trade 1.9 per cent higher at US$124.72 a tonne.
But with the first week of 2023 dominated by news about surging Covid infections in top steel producer China, the benchmark Dalian contract is down 1.3 per cent for the week so far.
On the Singapore Exchange, benchmark February iron ore was up 1.9 per cent at US$117.30 a tonne, as of 0755 GMT.
China is planning to relax restrictions on borrowing for property developers, Bloomberg News reported on Friday.
On Thursday, Chinese regulators said they had established a dynamic adjustment mechanism on mortgage rates for first-time home buyers.
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Rebar and hot-rolled coil on the Shanghai Futures Exchange both rose 2.7 per cent, wire rod gained 2 per cent and stainless steel climbed 0.2 per cent.
Other Dalian steelmaking inputs also rose, with coking coal and coke up 1.9 per cent and 2.8 per cent, respectively, as supply concerns remain despite China’s move to resume coal imports from Australia.
But weak market fundamentals, combined with a challenging macroeconomic environment due to Covid outbreaks, will likely keep prices volatile ahead of China’s week-long Spring Festival celebration from Jan 21, and even beyond, analysts said.
Industrial and construction activities in China usually grind to a halt during winter and holiday breaks.
“In the near-term, a potential ‘super spike’ in Covid-19 infections could prompt a sharp downturn,” HSBC economists said in a note, anticipating heightened caution among China’s citizens even as pandemic control measures are being relaxed.
“By the second quarter of 2023, pent-up consumer demand should drive a strong recovery, lifting mainland China’s economy more broadly,” they said. REUTERS
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