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Iron ore surges past $US140 to the highest since June 2022

Iron ore rallied to its highest since June 2022, showing Beijing’s efforts to stem the property market’s decline in recent months may be paying dividends.
Futures in Singapore rose above $US140 a tonne amid thin trading on Tuesday. Optimism is building that China’s economic recovery and its steel-intensive property sector are finally gaining momentum, after a subdued post-pandemic reopening in the past year disappointed investors
The salvo comes after Beijing in November announced a 1 trillion yuan ($186 billion) plan to boost urban revitalisation, providing relief for the steel-intensive property sector amid a wave of developer defaults.
With heightened anticipation for better demand, steel mills that have depressed iron ore stockpiles to keep operations lean may now face restocking pressure should needs exceed supplies.
The recent weekly commercial housing transaction data showed positive improvement and bolstered bullish sentiment, said Atilla Widnell, managing director at Navigate Commodities Pte in Singapore.
We maintain that iron ore futures should quite easily target $US145-158 a tonne at least by next quarter.” said Widnell.
The January contract for iron ore traded in Singapore finished up 1.1 per cent to $US140.25 a tonne. Futures in Dalian were 1.3 per cent higher, while steel rebar and hot-rolled coil both advanced in Shanghai.
Australia’s commodity export earnings are set to contract over the next couple of years as the prices of iron ore, liquefied natural gas and coal slump, according to government forecasts.
Fewer supply disruptions and “relatively soft” global economic growth, together with an expected strengthening in the Australian dollar, will push down revenue, the Department of Industry, Science and Resources said in a quarterly report released on December 18. However, the outlook for China has improved in recent months and concerns about a hard landing in the US have eased, it said.
Australia’s iron ore export earnings are expected to rise from $124 billion in 2022–23 to $131 billion in 2023–24 before falling to $102 billion in 2024–25. This is driven by lower prices over the outlook period.