Iron ore edged higher after top steel producer China cut more policy rates, while stainless steel futures jumped to a three-month peak, buoyed by record-high prices of key ingredient nickel.
Iron ore’s most-traded May contract on China’s Dalian Commodity Exchange rose as much as 2 percent to 747 yuan ($117.74) a ton, its highest since Jan. 13.
The steelmaking ingredient’s most-active March contract on the Singapore Exchange climbed 1.9 percent to $132.95 a ton.
China stepped up its monetary easing efforts to prop up a slowing economy this week by lowering a set of key policy rates and lending benchmarks, with markets expecting further moves.
“We view this week’s rate cuts as a pre-emptive move to drive a growth rebound in 2022,” said Commonwealth Bank of Australia commodity analyst Vivek Dhar, citing downside pressures from the reimposition of COVID-19 curbs and the property sector’s downturn.
Apart from China’s stimulus measures, Dhar said improved steel margins also supported iron ore prices.
Spot 62 percent-grade iron ore for delivery to China jumped to $132 a ton on Wednesday, the strongest level since Jan. 13, according to SteelHome consultancy.
“The fact that steel margins rose from November to December also suggests that steel demand has held up reasonably well — potentially indicating that steel demand from China’s infrastructure sector may be offsetting demand weakness from China’s property sector,” Dhar said.
He, however, said steel output restrictions in China were likely to return ahead of and during the Lunar New Year holiday from Jan. 31 to Feb. 6, and the Beijing Winter Olympics next month.
Stainless steel on the Shanghai Futures Exchange surged 6.9 percent to hit its highest since late October, as supply worries and strong demand propelled Shanghai nickel to a record peak. — Reuters
