The price of iron ore rebounded on Tuesday after China promised more support to help revive an economy in danger from the escalating virus outbreak.
The benchmark for 62% Fe fines imported into northern China rose as much as 1.3% to $138.32, as China's central bank pledged to increase monetary support to the real economy, particularly to industries and small businesses hard hit by the pandemic. .
This comes after the People's Bank of China decision on Monday to cut the amount of money banks are required to hold reserves for foreign currency holdings to help contain the yuan's decline.
On Monday, the metal price dropped nearly 9% amid fears that the fast-spreading omicron strain of the covid-19 virus has taken over Beijing.
"Policy could be the salvation for China's demand for iron ore and base metals this year," Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, wrote in a note.
"Politicians are hoping for a soft landing in the real estate construction sector that will help stabilize demand for commodities, while infrastructure investment in the country is also expected to increase significantly this year." he added.
Chinese Premier Li Keqiang said at a State Council meeting on Monday that the country should monitor the economic impact of internal and external factors that exceed expectations and implement policy measures in the first half to stabilize prices and economic fundamentals.
Benchmark iron ore futures for September delivery on the Dalian Commodity Exchange fell 2.5% to 809 yuan a tonne, extending losses into the third session.
Capital Economics said in a note Friday that it expects infrastructure stimulus to "provide a base below prices as the government appears willing to tolerate slower growth in 2022."
The country's first quarter apparent steel consumption fell 9.5% year-on-year, but demand has seen a recovery in the second half of the year, the China Iron and Steel Association said on Monday.
Source: Reuters
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