In Commodity News, Dry Bulk Market 07/12/2021
Dalian and Singapore iron ore futures rose on Monday, hoping that China’s monetary policy easing could curb the downside risks faced by the world’s largest steel producer and consumer country, but the increase was limited by concerns about steel production control.
The official media on Friday quoted Premier Li Keqiang as saying that after China will cut the bank deposit reserve ratio in due course, the overall sentiment remains optimistic.
However, the pollution alert in Tangshan, China's largest steel-making city, means production cuts in the industrial sector, including steel and coke, and worries about the debt of Chinese real estate developers have weakened investor optimism.
After the largest volume of iron ore for May delivery on China's Dalian Commodity Exchange rose 4.2% early in the session, the intraday trading price rose 1.6% to 615.50 yuan (US$96.58) per ton.
As of 0732 GMT, the January contract for steelmaking raw materials on the Singapore Exchange rose 2.1% to US$103.70 per ton, off the intraday high of US$104.60.
Atilla Widnell, Managing Director of Navigate Commodities in Singapore, said: "Although we expect China's steel production and iron ore demand to shrink in 2022, the prospect of loose monetary policy and China's "three red lines" should alleviate the economic slowdown. "
Known as the "three red lines", Chinese regulators have introduced financial requirements that developers must meet in order to obtain new bank loans.
"Market expectations indicate that after the Beijing Winter Olympics (February), domestic steel production will soar, and restrictions may be partially removed by then," Widner said.
According to data from SteelHome Consulting, China's spot iron ore transaction price on Friday was US$104.50 per ton, up from US$102 a week ago.
Construction rebar on the Shanghai Futures Exchange rose 0.7%, while hot rolled coil SHHCcv1 fell 0.2%. Stainless steel fell 1.1%.
Dalian Coking Coal rose 1.3%, and coke rose 3.1%. Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu Sahu and Uttaresh.V)