Iron ore extended its storming rebound from an 18-month low as moves in China to support its embattled real estate sector bolstered the demand outlook.
Futures in Singapore have climbed more than 50% in just six weeks as demand prospects brighten. Authorities in China are encouraging banks to fund acquisitions of projects of distressed developers and pushing financially healthy property firms to make such purchases.
In addition, domestic banks lowered borrowing costs for the first time in 20 months, and the People’s Bank of China earlier this month cut the amount of cash banks must hold in reserve to free up funds.
Prices are being further buoyed by increasing production at Chinese steel mills after stringent curbs on volumes earlier this year.
“The improvement in the property and infrastructure outlook added fuel to the expectations of mills resuming production,” Holly Futures wrote in a note, adding that the recent start of the winter restocking also supported the demand for raw material, while environmental controls still remain.
Iron ore in Singapore jumped as much as 4% to $129.45 a ton, the highest since mid-October, before trading at $128.20 at 3:35 p.m. local time. Dalian futures rose 4.2%, while steel rebar and hot-rolled coil eased in Shanghai.
© 2021 Bloomberg L.P.