The
iron ore price extended gains on Tuesday on hopes of additional policy support
for China’s economy.
The
most-traded September iron ore contract on China’s Dalian Commodity
Exchange ended daytime trade 1.3% higher at 714 yuan ($103.30) a tonne. It
earlier touched 727.50 yuan, its highest since April 27.
Iron ore gains come after prices reached a six month low last week amid speculation
about new rules governing state-owned enterprises’ bond issuances, and as
China’s housing regulator ordered real estate brokers to reduce transaction and
leasing service fees to support the property sector.
“We expect commodity markets to remain reactive to any signs of
policy support. That should keep iron ore prices volatile in the short term,”
Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
China’s iron ore imports dropped 9.8% in April from
the month before but rose 5.1% from April last year as buyers anticipated
strong demand during the peak spring construction season, though it turned out
otherwise.
Overall, Chinese overseas shipments expanded 8.5% from a year
earlier to $295 billion — slowing from the double-digit gain in March. Imports,
though, dropped 7.9% to $205 billion, much worse than the median projection of
a 0.2% decline. That left a trade surplus of $90 billion for the month.
“Neighboring countries such as Japan and South
Korea are disappointed as they had expected positive effects from China’s
reopening of their economy,” said Ding Shuang, chief economist for Greater
China and North Asia at Standard Chartered Plc.
mining.com