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Iron ore rises as China’s construction stimulus pays off

Bloomberg

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Iron ore rose after Chinese economic indicators suggested that government stimulus is boosting the ailing construction industry, which should flow through to stronger demand for the steel-making material.

Iron ore added 1.9pc to $US98.85 a ton as of 11.13am in Singapore. Bloomberg

Higher steel output and falling rebar inventories are signalling Beijing’s bid to stimulate construction after an almost year-long property rout are having a positive impact. Daily steel output edged up 3.3 per cent in the first 10 days of September compared with the end of August, while new investments are fuelling building activity.

The market remains largely optimistic that disruptions to businesses due to strict COVID-19 restrictions will be minimal amid the peak construction season, which lasts till end-October. It shrugged off news that a district in Tangshan that includes steel mills has been placed in a snap lockdown for at least three days.

With China’s recovery the main focus for authorities, the economic impact of lockdown restrictions may be lessening, according to Chen Wenguang, a research director at Lange Steel Information Research Centre.