Iron ore futures on the Dalian and Singapore exchanges rose on Monday after China cut benchmark lending rates to support its economy.
But the price recovery is likely to be short-lived as demand prospects remain hazy.
China has cut its benchmark lending rate and lowered its mortgage benchmark, adding to last week’s easing measures as it struggles to revive an economy crippled by a housing crisis and a resurgence of Covid-19 cases.
On the Singapore Stock Exchange, the ore contract for September rose 1.1% to $101.90 a tonne.
January’s top-traded iron ore on the Dalian Commodity Exchange rose as much as 2.6% to 698 yuan ($102.21) a tonne, before easing the rise and ending trading with a 1.5% gain. as demand prospects remained bleak.
“The heat wave and record high temperature (in China) still exists, which is destroying demand for construction steel. You still have Covid. People are still not out on the streets consuming steel-intensive goods,” said Atilla Widnell, managing director of Navigate Commodities in Singapore.
Dalian iron ore fell in every trading session last week, posting the strongest weekly decline in five weeks.
Prices are down about 40% from the record 1,196 yuan per tonne set in May last year.
Rising consumption of steel scrap by Chinese steelmakers has also dampened demand for iron ore, while rising inventories of imported iron ore at Chinese ports — at a three-month high — also weighed on prices.
Source: CNN Brasil
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