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Iron ore prices climbed to a five-month high Friday, with the Singapore benchmark posting its biggest weekly gain since June, helped by improving sentiment and China’s move to bolster economic stimulus efforts.
Prices have rallied about 8% this week, ahead of an anticipated seasonal pickup in construction that usually lasts until the end of October, while China’s central bank injected cash into markets for the 10th straight month and cut lenders’ reserve requirements for the second time this year.
Benchmark October iron ore (SCO:COM) on the Singapore Exchange closed at $121.13/metric ton after rising as much as 2.4% to $123.50, its best level since mid-March, and the most-traded January contract on China’s Dalian Commodity Exchange ended daytime trading +2.3% at 879 yuan/ton ($120.91) after reaching a contract high of 881.50 yuan.
Potentially relevant stock tickers include (NYSE:BHP), (NYSE:RIO), (VALE), (OTCQX:FSUMF), (OTCPK:GLCNF), (OTCPK:GLNCY), (OTCQX:AAUKF), (OTCQX:NGLOY)
The rally has been driven by signs that China’s struggling property sector may improving, with new bank loans nearly quadrupling in August to 1.36T yuan from July.
Prices also are enjoying a boost from strong import volumes; China, which buys 70% of global seaborne iron ore, imported 106.4M metric tons in August, the most since October 2020.
But some factors could cap iron ore’s, such as expectations that steel mills will be forced to limit production in coming months to limit winter pollution and maintain an unofficial policy that steel output should not grow this year.
