Iron ore price set to rise as Beijing caves in on stimulus to aid faltering economy

Iron ore futures have spiked after China announced a series of measures to boost growth, buoying the outlook for WA’s key mineral commodity.

Futures rallied more than 4 per cent in Singapore on Tuesday, then pared some of their initial gains, after China’s central bank governor Pan Gongsheng said that policymakers would help banks boost lending to consumers, cut the key short-term interest rate, and lower mortgage rates on existing housing loans.

Shares in Australia’s iron ore mining giants record big gains following the announcement. By the close of trade Rio Tinto’s stock was up 3.8 per cent, BHP rose 3.3 per cent and Fortescue jumped 1.7 per cent. Mineral Resources surged 6.5 per cent — also fuelled by a rise across the lithium sector.

Iron ore, a steelmaking staple, has been among the worst performing major commodities this year as China’s slowdown — especially the nation’s drawn-out property crisis — has hurt demand, with mills reducing steel output.

Chinese steelmaker Baowu last month warned of a “long and harsh winter” for the steel industry and was downbeat on the prospect of its government lending a helping hand.