The futures contracts of iron ore in Dalian and Singapore rose on Monday (6), in the hope that an easing of monetary policy in China may contain downside risks faced by the world’s largest steel producer and consumer, but gains were limited by fears of controlling steel production.
General sentiment remained buoyant after Prime Minister Li Keqiang said on Friday, according to state media, that China will cut bank reserve requirements.
However, an alert of pollution in the country’s main steel city, Tangshan – which means production cuts in the industrial sector, including steel and coke – and concerns about debts Chinese property developers dampened investor optimism.
The most traded iron ore for May delivery on the Commodities The Dalian trade closed up 1.6% at RMB 615.50 (US$96.58) a ton, after shooting up 4.2% earlier in the session.
The January contract for the steel ingredient on the stock exchange of Singapore rose 3%, to US$ 104.65 a ton, at 8:07 am, Brasília time.
“While we expect Chinese steel production and iron ore demand to contract in 2022, the prospect of easing monetary policy and China’s ‘three red lines’ should smooth out the slowdown,” said Atilla Widnell, managing director of China Navigate Commodities in Singapore.
Chinese regulators have introduced financial requirements that developers must meet to obtain new bank loans, which have been dubbed “the three red lines”.
China’s spot iron ore traded at $104.50 a ton on Monday, flat, based on data from consultancy SteelHome.
the rebar of steel for construction on the Shanghai Futures Exchange rose 0.7%, while hot rolled coil fell 0.2%. Metallurgical coal advanced 1.3% and coke rose 3.1%.
Reference: CNN Brasil
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