Iron ore futures prices rose on Monday as investor sentiment was bolstered by China’s efforts to revive its struggling property market, and an expected wave of restocking from steelmakers after the Labour Day holidays.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 2.63% higher at 896 yuan ($124.21) per metric ton, the highest since March 7. The benchmark June iron ore on the Singapore Exchange was also 2.05% higher at $119.45 per ton, as of 0823 GMT, the highest since April 25.
China’s government said in a politburo meeting on April 30 that it would coordinate and improve policies to clear housing inventory, while private data showed April home sales for major property developers dropped at a slightly slower pace. This signaled potential support for the beleaguered property sector.
“There is some positive change in this meeting content compared to the one held late last-December; the sales of housing inventory will provide substantial help to property developers facing capital strains,” said analysts at China Galaxy Securities.
Beijing also announced “optimized measures” last Tuesday to allow some residents to buy a new flat in outer districts to boost home sales.
The prospect of improved fundamentals, thanks to continuously increased hot metal output and falling ore arrivals, also lifted sentiment. Analysts at Yongan Futures expect a turning point in terms of portside stocks to emerge if the production resumption among mills accelerates in mid-to-late May.
The Chinese derivatives markets, which were closed on May 1-3 for the May Day holiday, had yet to react to the latest policy signals, contributing to the price surge on Monday.