China’s potential fiscal stimulus is stirring excitement in the iron ore and steel markets, pushing iron ore futures higher on Dalian and Singapore exchanges.
Iron ore and steel prices are climbing as traders anticipate further fiscal measures from China, a dominant player in the steel industry. The January iron ore contract on the Dalian Commodity Exchange saw a 2.87% increase, reaching 807.5 yuan per metric ton, while the Singapore Exchange saw a 2.11% rise to $108.45 per ton. Steel benchmarks in Shanghai followed suit, with gains across rebar, hot-rolled coil, and wire rod. These price boosts are tied to China's new fiscal policies, which have improved market sentiment, fueling profit-making among more integrated steel mills and boosting their operational rates. However, China's economic landscape remains uncertain, plagued by deflationary pressures and lack of clear stimulus details. While Beijing plans additional 'counter-cyclical measures,' the specifics are awaited. ING analysts believe potent fiscal stimulus could mitigate deflation and economic frailty.
