China’s Economic Measures Spark Iron Ore Futures Rally
China’s recent economic measures have ignited a surge in iron ore futures, with prices climbing for four consecutive sessions, marking a 10%+ weekly gain. The rally follows interest rate cuts and expectations of additional fiscal and property sector stimuli.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange closed 4.38% higher on Friday, reaching 750 yuan ($106.94) per tonne. In parallel, the benchmark October iron ore contract on the Singapore Exchange rose 3.38% to $101.85 per tonne.
China’s central bank, the People’s Bank of China (PBoC), announced a reduction in the reserve requirement ratio for banks to bolster economic growth. This move has bolstered market sentiment towards commodities, including iron ore.
The Chinese government aims to achieve a 5% economic growth target for 2024 and plans to issue 2 trillion yuan ($285.2 billion) in special sovereign bonds as part of its fiscal stimulus package. Additionally, potential policy shifts in major cities like Shanghai and Shenzhen could stimulate demand for steel and iron ore, crucial for China’s economy.
Stimulus Plan Enhances Iron Ore Prices
Earlier in the week, the PBoC unveiled its largest stimulus package since the pandemic, including interest rate reductions and easier access to financing for stock purchases. These measures have created a positive outlook for iron ore futures and the overall commodities market.
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