Iron Ore Futures Climb on China Stimulus Signals

Highlights:

• Iron ore futures rose 1.18% to 772.5 yuan (US$108.45) per tonne on the Dalian Commodity Exchange and 0.97% to US$102.5 per tonne on the Singapore Exchange, at the time of writing.
• Prices climbed as investors bet on potential stimulus measures after China’s central bank pledged to maintain “appropriately loose” monetary policy and sufficient liquidity.
• Despite the recent price rebound, ongoing worries about sluggish steel demand and increasing iron ore supply continue to cloud the market’s medium-term prospects.

Stimulus Optimism Underpins Gains

Global iron-ore futures rallied as investors seized on indications that People’s Bank of China would keep monetary policy “appropriately loose” and maintain ample liquidity to shore up the economy. At the time of writing, the most-traded January contract on the Dalian Commodity Exchange (DCE) rose 1.18 per cent to 772.5 yuan a tonne, while the benchmark December contract on the Singapore Exchange (SGX) stood around US $102.50 a tonne.

This optimism came despite concerns about waning demand and growing supply. The positive policy signal from Beijing has emboldened bulls anticipating a rebound in industrial metals, especially iron ore.

Still, Fundamental Risks Loom

While stimulus hopes are fuelling short-term momentum, underlying demand fundamentals remain under strain. China’s export performance has weakened, and steel-making activity has moderated. For example, one report noted that sentiment is upbeat but the market remains “delicate” given oversupply concerns.

What to Watch Next

Looking ahead, the critical question is whether Chinese stimulus translates into sustained steel-sector expansion and ore demand. Key indicators will include steel output and port inventory changes, along with any further policy announcements from Beijing. A meaningful uptick would support the current strength in iron-ore prices. Conversely, if demand growth disappoints, the recent gains might prove short-lived. In short, the rally is riding on hope, not yet on clear-cut recovery.

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