Iron ore futures rallied on Monday, with the steelmaking raw material’s Singapore benchmark hitting a five-month high, amid optimism over top steel producer China’s policy support for its struggling property sector.
China is set to take further action, including relaxing home-purchase restrictions, as it scrambles to tackle a deepening crisis in its debt-riddled property sector, Reuters reported on Friday, citing four people familiar with the matter.
The report came after regulators last week relaxed criteria for first-home mortgages, while some cities in China said they would allow home buyers to enjoy preferential loans for first-home purchases regardless of credit records.
Iron ore’s most-active October contract on the Singapore Exchange rose as much as 1.9 percent to hit $116.10 per metric ton, its strongest since April 3.
The most-traded January iron ore on China’s Dalian Commodity Exchange climbed by up to 2.6 percent to hit a contract high of 865.50 yuan ($119.26) per ton, extending its gains to a fourth session.
Further “upside shocks in response to more dovish property policy measures” in China were supporting iron ore, Navigate Commodities Managing Director Atilla Widnell said.
Adding to the upbeat sentiment, Chinese developer Country Garden won approval from its creditors to extend payments for an onshore private bond, Reuters reported.
Without additional support from fundamentals, however, “iron ore prices should eventually gravitate lower back into our medium-term target range ($92-$108/ton) – once financial markets have “scratched their itch” on hopes and dreams of more stimulus”, Widnell said. -Reuters
