Iron ore futures prices were largely unchanged on Tuesday, following a strong increase the previous day, as investors reacted to proposed property stimulus measures and post-holiday period restocking at furnaces in China.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended the day 0.06% lower at 886.5 yuan ($122.88) per metric ton. Prices rose by 2.63% on Monday, the first day of trading since the end of China’s five-day Labour Day Holiday.
The Chinese government’s Politburo said in a readout on April 30 that authorities should conduct research on policies and measures to reduce housing inventory in order to prevent and diffuse risk in the real estate market, stoking hopes for further stimulus.
“There will still be a certain increase in demand in the future, and the supply and demand of iron ore will be strong,” analysts from information provider Shanghai Metals Market said in a note, citing higher issuance of special bonds as a factor increasing market confidence.
A survey by industry consultancy Mysteel showed that hot metal production over the five-day holiday period was up 0.9% from the pre-holiday level, averaging 2.33 million metric tons per day. Additionally, the purchasing managers’ index for the steel industry in China’s top steel producing region Hebei climbed by 12.7 percentage points in April, indicating strongly improving sentiment from steel mills.
Other steel benchmarks on the Shanghai Futures Exchange also saw mixed results, with rebar and hot-rolled coil edging up, while stainless steel fell.
The relative stability in iron ore prices suggests that investors are cautiously optimistic about the potential for property stimulus measures to support demand, while also monitoring the post-holiday period restocking activities at steel mills.