By Onome Amuge
Iron ore futures extended gains for the third consecutive week, as top steel producer China’s latest moves to strengthen its flagging economy brightened demand prospects.
Analysts noted that expectations that Beijing will take more policy actions to support the economy, after easing some of its strict COVID-19 containment rules and unveiling fresh measures to aid an ailing property sector added to the buoyant demand mood.
Also raising optimism for Beijing’s pro-growth stance is a statement by Liu Shijin, a policy adviser to the People’s Bank of China (PBOC), which said China should set its economic growth target no lower than 5 percent for 2023.
The most-traded January iron ore on China’s Dalian Commodity Exchange was up 3.3 percent at 753.50 yuan or $105.76 a tonne at the close of trading activities for the week. Earlier in the session, it hit the highest level since Aug. 1 at 757.50 yuan. On the Singapore Exchange, benchmark December iron ore climbed 2.1 percent at $98.95 a tonne.
ANZ commodity strategists observed that China’s zero-COVID strategy had caused significant economic damage to the world’s second-largest economy.
“Looser quarantine rules suggest an end to the restrictions is closer than we thought,” they added.
Projecting a softer landing now for the Chinese property sector, ANZ has increased its forecast for China’s 2023 steel output to 1.05 billion tonnes from 1.01 billion tonnes, but expects the iron market to remain in deficit.
Chinese steel benchmarks and other steelmaking inputs also expanded weekly gains as rebar on the Shanghai Futures Exchange rose a further 0.3 percent, while both hot-rolled coil and wire rod climbed 0.8 percent. In contrast, stainless steel lost 0.8 percent.
