Iron ore led gains among industrial metals as China vows to use more monetary policy tools to spur the economy, brightening the outlook for raw materials demand.
Futures in Singapore climbed over 3% to more than $130 a ton, while base metals including nickel and copper continued their new year rally.
China, the world’s biggest buyer of metals, has been mired in a property market slump, credit stress and repeated virus outbreaks. In response, the central bank this week cut its policy interest rate for the first time in almost two years, signaling the beginning of an easing cycle.
“There’s a trend of strengthening the macro policies to stabilize the economy amid downward pressure on the real-estate market,” Huatai Futures said in a note. An official at China’s top economic planning agency repeated a call this week to front-load infrastructure investment to help the economy.
In the ferrous space, the dovish comments from Beijing have outweighed concerns over winter production curbs in China’s key steel-making city.
Tangshan announced plans for the winter curbs on Tuesday, Mysteel reported, citing local government documents. According to Mysteel’s own survey, the capacity utilization rate for blast furnaces in the city will be lowered to 63% from 78% when 16 more furnaces shut from Jan. 30 to Feb. 20 and from March 3-13, affecting capacity of about 60,000 tons a day.
“The resumption of production at steel mills may have to wait until after the Lunar New Year holidays, which could have an impact on the supply of steel,” Huatai said. In Shanghai, rebar jumped to the highest level since October and hot-rolled coil also advanced.
Iron ore futures in Singapore climbed as much as 3.5% to $131.40 a ton before trading at $130.75 by 11:30 a.m. local time, while prices in Dalian rose 3.5%.
Nickel is trading near the strongest in a decade amid a supply squeeze, while much-less traded tin has notched record highs on the London Metal Exchange. Nickel rose as much as 1.4% to $22,385 a ton, while copper gained 0.5%.
