The economic policies announced at the press conference held by the State Council Information Office in China on October 8th did not have the expected impact on the market. According to market experts, the announced incentives were not enough to meet the expectations of market participants.
Looking at the general mood in the market, some participants took advantage of lower prices to stock up, while demand remained stable and sales were below the expected level. Investors are assessing the short-term demand uncertainty and the market remains cautious.
On the Dalian Commodity Exchange (DCE), the most traded January iron ore contract DCIOcv1 decreased by 2.37% to USD 111.15. Coke DJMcv1 and coke DCJcv1 were down 0.77% and 1.61%, respectively.
On the Singapore Exchange, November iron ore SZZFQ4 decreased by 4.97% and was recorded at USD 105.25 per ton.
Prices on the Shanghai Futures Exchange showed a general upward trend. Rebar SRBcv1 increased by 0.43%, wire rod SWRcv1 by 8.1%, hot rolled coil SHHCcv1 by 1.7% and stainless steel SHSScv1 by 1.6%.
The real estate incentives and monetary expansions in the Chinese economy, especially in the last two weeks, have caused commodity prices to increase by more than 20%. In addition, some official sources in China reported an increase in housing sales after the public holiday in the country, following the real estate incentives to revive the struggling real estate market since September.
On October 8, at a press conference held by the State Council Information Office, Zheng Shajie, Director of the National Development and Reform Commission, stated that the policies mainly focused on:
- Strengthen support for local governments to undertake debt swaps and create a better fiscal environment for investment and financing of operating entities
- Formulating guidelines for the construction of a unified national market
- Release all 700 billion investments in the central budget and release all 1 trillion ultra-long term special government bonds to projects and localities
- Continued issuance of ultra-long special treasury bills, optimizing investment aspects and increasing support for the “double-layer” structure
- Adopt more inclusive and prudent oversight and flexible law enforcement methods to accelerate the legislative process to promote the private economy
- Increase credit supply to whitelist projects and accelerate the digestion of existing commercial housing
- Steadily advance the reform of public funds and explore and implement policies and measures to protect small and medium-sized enterprises and small and medium-sized investors
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