Iron ore led industrial metals on Wednesday as China vowed to use more monetary policy tools to stimulate the economy, improving the raw material's demand outlook.
Singapore futures rose over 3% to over $130/t. Dalian iron ore rose almost 5%, while benchmark 62% fine Fe imported into northern China changed hands at $131.23 a ton during morning trading, up 2.8% in compared to Tuesday's close, according to Fastmarkets MB.
"Expectations of easing from the People's Bank of China in preparation for tightening U.S. monetary policy will encourage traders to bet on rate-sensitive assets such as commodities and bonds," Hong Hao, head of research at BOCOM International, wrote in a research paper. note.
China, the world's largest buyer of metals, has been mired in a booming real estate market, credit stress and repeated virus outbreaks. In response, the central bank cut interest rates this week for the first time in nearly two years, signaling the start of an easing cycle.
"There is a trend towards strengthening macroeconomic policies to stabilize the economy amid downward pressure on the real estate market," Huatai Futures said in a note.
Tangshan, the leading steelmaking region, announced plans for winter restrictions on Tuesday, Mysteel reports, citing local government documents.
According to Mysteel's own study, the city's blast furnace capacity utilization rate will drop to 63% from 78% when another 16 furnaces are shut down from January 30th to February 20th and from March 3rd to March 13th, affecting a capacity of around 60,000 tons per day.
"The resumption of production at steel mills may have to be postponed until the Lunar New Year holiday, which could affect steel supply," Huatai said.