NEW DELHI- Iron ore futures rose on Thursday, with the Dalian benchmark extending gains to a third session on expectation of a boost to the Chinese economy following the central bank’s move to cut the amount of cash that banks must hold as reserves.
The most traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) was up 2.11 percent at 992 yuan ($138.57) a metric ton,. It briefly touched its highest level since Jan. 9 at 995 yuan.
People’s Bank of China (PBOC) Governor Pan Gongsheng said on Wednesday the bank would cut the reserve requirement ratio (RRR) for all banks by 50 basis points (bps), adding that the move would free up 1 trillion yuan ($139.45 billion) to the market.
“The iron ore market was also swept up in the optimism following the cut to China’s RRR,” ANZ Research said in a note.
“Futures rallied more than 2 percent on hopes it would boost activity in the country’s construction sector. This comes as inventory data suggests demand remains weak.”
The benchmark February iron ore on the Singapore Exchange was 0.59 percent higher at $136 a ton.
Other steelmaking ingredients on the DCE posted gains, with coking coal and coke up 0.90 percent and 1.05 percent , respectively.
