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Dalian iron ore settles near 8-month peak on China stimulus hopes

Credit: REUTERS/MUYU XU

Ferrous commodity futures in China climbed on Friday, with iron ore hovering near an eight-month peak as a gloomy domestic factory activity data bolstered expectations of additional economic stimulus measures for the world's top steel producer.

By Enrico Dela Cruz

April 1 (Reuters) - Ferrous commodity futures in China climbed on Friday, with iron ore hovering near an eight-month peak as a gloomy domestic factory activity data bolstered expectations of additional economic stimulus measures for the world's top steel producer.

The most-traded iron ore, for September delivery, on China's Dalian Commodity Exchange DCIOcv1 ended daytime trade 3.5% higher at 926 yuan ($145.75) a tonne to mark its sixth straight weekly gain. It earlier touched its highest since Aug. 5 of 926.50 yuan.

On the Singapore Exchange SZZFK2, the steelmaking ingredient's most-active May contract advanced 1.4% to $161.90 a tonne by 0718 GMT.

Spot iron ore in China traded at $158.50 a tonne on Thursday, its strongest level since March 9, based on SteelHome consultancy data. SH-CCN-IRNOR62

China's factory activity slumped at the fastest pace in two years in March, as a resurgence in COVID-19 cases and the economic fallout from the Ukraine war triggered sharp falls in production and demand.

"The Chinese economy appears to have stumbled in March, as the spike in domestic COVID cases adds a downside risk to near-term domestic activity, along with rising uncertainty on the external sector amid global geopolitical risks," J.P.Morgan economists said in a note.

To shore up the economy, Beijing is expected to roll out policy measures, including fiscal support for infrastructure projects, via special local government bonds, and the corporate sector, via tax and fee reductions, they added.

Cuts in the policy interest rate and the reserve requirement ratio are also expected, they said.

Additional stimulus beyond the National People's Congress' policy guidelines hinges on whether growth pressure further mounts, they said. "The Politburo meeting in late April is worth watching out."

Construction steel rebar on the Shanghai Futures Exchange SRBcv1 climbed 2%, while hot-rolled coil SHHCcv1 rose 1.6%. Stainless steel SHSScv1 slipped 0.5%.

Dalian coking coal DJMcv1 gained 1.8% and coke DCJcv1 advanced 2.1%.

(Reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips and Rashmi Aich)

((enrico.delacruz@thomsonsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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