Iron ore futures rose on Wednesday, with Singapore’s benchmark index recovering after six consecutive sessions of declines, amid returning hopes that China may consider implementing stronger stimulus measures to support its declining economy.
The most active November contract for the steel component on the Singapore Exchange rose 0.7 percent to $111.55 per tonne, after hitting a six-week low of $109.25 in the previous session.
The most-traded January iron ore contract on China Commodity Exchange Dalian ended the day up 1% at 827.50 yuan ($113.39) per tonne.
Singapore’s benchmark price has fallen more than 7% from its third-quarter peak of $121.10, with recent losses fueled by concerns over impending steel production cuts in China and uncertainty surrounding the sector Chinese real estate, which is experiencing difficulties.
Country Garden warned of its inability to meet offshore debt obligations, potentially joining a growing list of defaulting Chinese developers and underscoring the worsening crisis affecting the world’s second-largest economy and largest consumer goods producer of steel and metals.
“We note that the deterioration of China’s real estate sector is potentially a catalyst for more significant stimulus, which we see increasing commodity prices from current levels,” analysts at National Australia Bank said in a note.
China’s highest court has issued guidelines to improve the legal environment for private companies, prompting renewed efforts by policymakers to support a key driver of growth, according to a report.
Meanwhile, China is looking to widen its budget deficit for 2023 as the government prepares for a new round of stimulus to help the economy reach its annual growth target, Bloomberg News reported Tuesday, citing people who are familiar with the topic.
Source: Terra
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