Iron ore soars as China COVID curbs eased despite surge in cases

Source: Hellenic Shipping News

By: Jamie Carter

Date: Nov 12, 2022

Iron ore futures surged on Friday as China eased some of its COVID-19 rules, taking bold steps a day after the nation’s new top leadership body stressed the need to minimise the impact of containing outbreaks on the world’s second-biggest economy.

Price benchmarks for steel products and other steelmaking inputs in China, the world’s top steel producer, also stretched gains after authorities announced the measures.

The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 5% higher at 708.50 yuan ($99.86) a tonne, after touching its highest since Oct. 12 at 720 yuan.

On the Singapore Exchange, the steelmaking ingredient’s benchmark December contract SZZFZ2 climbed up to 8.2% to $93.60 a tonne.

Sentiment was already upbeat before China announced the relaxed COVID-19 curbs, despite a surge in new case numbers and the ruling Politburo Standing Committee reaffirming Beijing’s zero-COVID policy.

The new rules, including shorter quarantine time for close contacts of cases and for inbound travellers, were among measures examined at Thursday’s committee meeting.

“Short-term emotional factors dominate the market trend,” Sinosteel Futures analysts said in a note, also citing hopes of a slowdown in the U.S. Federal Reserve’s interest rate hikes, which lifted overall investor sentiment.

Dalian coking coal DJMcv1 rose 3.7%, while Dalian coke DCJcv1 advanced 4%.

On the Shanghai Futures Exchange, rebar SRBcv1 rose 2.5%, hot-rolled coil SHHCcv1 gained 2.1%, while both wire rod SWRcv1 and stainless steel SHSScv1 climbed 3.3%.

This week’s gains in China’s ferrous complex, however, appeared lacking support from fundamentals.

Chinese appetite for iron ore is currently poor as steel mills have opted to reduce output while nursing losses from weak demand partly due to a property sector slump.

The usual winter steel production curbs are also looming in China, likely keeping iron ore demand subdued at least in the next four months.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips)



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