Iron ore traded on the Dalian Stock Exchange hit a seven-month high on Monday and the benchmark index on the Singapore Stock Exchange rebounded above $150 a tonne, with traders cheering China’s decision to increase its injection of short-term funds to combat any possible liquidity squeeze in the market.
Other steel ingredients traded on the Dalian Commodity Exchange and steel prices on the Shanghai Futures Exchange also rose, despite risk sentiment in other assets amid heightened Covid-19 restrictions in China.
The top-traded Dalian iron ore contract for September delivery ended day trading up 4.4% at 870 yuan ($136.52) a tonne after hitting 882.50 yuan its highest level since August 30th.
The most active iron ore contract in May on the Singapore Stock Exchange rose 0.4% to $154.95 a tonne.
“The market initially sold in the first 15 minutes, but has since reacted very positively to the People’s Bank of China injecting 150 billion renminbi… in Singapore.
“More aggressive liquidity injections provide the market with some degree of comfort and confidence that local banks will not face a funding squeeze,” he said.
China will also soon launch measures to facilitate the issuance of bonds by private companies, China’s securities regulator said late on Sunday.
Increased coronavirus restrictions in China, the biggest steelmaker, with the financial hub of Shanghai launching a two-stage lockdown, could further damage growth prospects for the world’s second-largest economy.
Source: CNN Brasil
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