Iron ore price back above $130 as China pledges support

Iron ore led gains among industrial metals Wednesday 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 tonne. Dalian iron ore jumped nearly 5%, while benchmark 62% Fe fines imported into Northern China were changing hands for $131.23 a tonne during morning trading, up 2.8% compared to Tuesday’s closing, according to Fastmarkets MB.

“Expectations of easing from the People’s Bank of China while bracing for tighter US monetary policy will spur traders to punt on rates-sensitive assets such as commodities and bonds,” Hong Hao, head of research at BOCOM International, wrote in a research note.

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.