Iron Ore Futures Surge to Nearly Three-Month High Amid Chinas Property Stimulus

Highlights:

• Iron ore futures jumped 9.5% on China's Dalian Commodity Exchange, hitting their highest level since July at 835 yuan per metric ton.
• Singapore iron ore futures surged 8.53% to $US110.85 per ton, driven by China’s property stimulus and easing monetary policies.
• China’s central bank announced mortgage rate reductions and eased home purchase restrictions in key cities, boosting demand for steelmaking ingredients.

China’s Stimulus Sparks Iron Ore Rally

Iron ore futures have surged for the fifth consecutive session as China’s latest property stimulus and monetary easing policies fueled optimism for increased demand. Fonterra Co-operative Group (ASX: FCG) saw a significant rise in its iron ore futures on the Dalian Commodity Exchange (DCE) and the Singapore Exchange, reflecting the impact of these economic moves.

Iron Ore Prices Hit New Highs

As of 0304 GMT, the most-traded January iron ore contract on the Dalian Commodity Exchange jumped 9.5% to 812.5 yuan ($US115.83) per metric ton, after reaching an intraday high of 835 yuan, the highest level since July 16. Similarly, the benchmark November iron ore contract on the Singapore Exchange surged 8.53% to $US110.85 per ton (at the time of writing), after touching $US113, the highest since July 5.

China’s Property Market Boosts Demand

China’s central bank announced a plan to reduce mortgage rates for existing home loans by October 31, as part of comprehensive policies to support the country’s property market—an essential consumer of steel. In addition, key cities like Guangzhou, Shenzhen, and Shanghai have relaxed home purchase restrictions, further driving demand for iron ore.

Outlook for Continued Growth

With China’s property developers gaining momentum and the CSI 300 Real Estate index rising by 9%, analysts expect strong fiscal stimulus ahead, which could continue to bolster iron ore prices. Last week, both the Dalian and Singapore benchmarks posted gains of over 10%, marking a strong performance for the steelmaking ingredient.

As China’s economy stabilizes, market optimism around iron ore demand is likely to persist.

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