BY ONOME AMUGE
Iron ore recovered from one-week lows posted in the previous session, as dealers shifted focus from the bleak economic outlook for top steel producer China to possible additional stimulus measures to meet its growth target.
The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange, rose 4.5 percent at 864 yuan or $128.29 a tonne, while the benchmark contract jumped to its biggest weekly gain in two months, despite losses over the past three days.
On the Singapore Exchange, the most-active June contract for the steelmaking ingredient was up 1.3 percent to $131.25 a tonne.
According to market participants, the turnaround followed Li Keqiang, the Chinese premier’s acknowledgement of the country’s weak economic growth, which emphasised that difficulties in some aspects were worse than in 2020, when the economy was first hit by the COVID-19 outbreak.
Li assured that the Asian powerhouse will strive to achieve reasonable economic growth in the second quarter and stem rising unemployment.
In that regard, Beijing announced a package of policy steps, including broader tax credit rebates and postponing social security payments and loan repayments to support the economy.
Daniel Hynes, a senior commodity strategist at ANZ, observed that iron ore prices stood firmer as investors continue to look ahead to stimulus measures supporting demand.
Hynes however noted that any plan to boost infrastructure spending won’t boost demand until steel production starts to rebound.
Other Dalian steel inputs also recorded gains as coking coal jumped five percent after a four-day sell-off, construction steel rebar on the Shanghai Futures Exchange was 2.7 percent higher, hot-rolled coil advanced two percent, while stainless steel added 0.4 percent.