The iron ore price rose on Monday as the Chinese government's commitment to focus on economic stability next year bolstered the demand outlook.
China has pledged to maintain prudent monetary policy and proactive fiscal policy and prioritize economic stability in 2022, according to the annual Central Economic Labor Conference held last week.
"No major changes are expected on the supply side of iron ore next year, with shipments from mainstream miners remaining stable and production from local mines seeing little change," said SinoSteel Futures analyst Cheng Peng.
"The main factor that will affect iron ore prices will be demand, which is more elastic due to real estate market policy."
On the Dalian Commodity Exchange, benchmark iron ore futures for May delivery rose as much as 5.9% to 674 yuan ($105.93), closing a tonne at 669 yuan, up 5%.
Iron ore futures in Singapore rose 7.2% to $116.15 per tonne.
Iron ore has been tumultuous this year as multiple production and pollution restrictions impact consumption and real estate turmoil has halted construction activities. Steelmaking material has halved roughly from its peak in May, although recently bolstered by increased demand.
According to Huatai Futures, "The market's focus has been on the policy side again lately".
"While weak real estate data drags down the ferrous metals market, the outlook for next year is not so pessimistic, based on the overall 'stability' target in China."
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