Iron ore rose on expectations that the recovery in economic growth, including additional support from the Chinese government, will boost steel demand.
Futures in Singapore were up as much as 10% as a potential boost to US vaccinations increased sentiment across all assets from equities to base metals. Separately, China's central bank governor pledged to stabilize the supply of credit and increase the amount of money that supports small businesses and the real economy after both credit and economic growth slowed in July.
Erik Hedborg, principal analyst at CRU Group, said in China, "People hope to receive more incentives targeting the infrastructure sector as real estate and manufacturing look bleak." said. "In the rest of the world, we see steel production stabilizing at levels below pre-pandemic levels."
Iron ore suffered an extraordinary slump last month, losing nearly a quarter of its value, as China's demand for curbing steel production slashed demand. Iron ore stocks in the country's major ports rose by 1.3% last week, indicating a softening in consumption, while steel production fell in July.
Market watchers pointed to more volatility to come amid an uneven global recovery alongside a complex policy backdrop in China.
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