Iron ore last week rose to the highest level in almost four months on signs that Chinese authorities would announce more support for the property sector at a key meeting next week.
Futures advanced in Singapore on Friday, extending a rally from a 45-month low at the end of October to almost 50 percent.
The steelmaking ingredient has been buoyed by a steady stream of policies favorable to the real-estate industry in the world’s most-populous nation.
Photo: AP
Traders are banking on hopes that the property sector, good for 40 percent of China’s steel consumption, would get more support at the Chinese Central Economic Work Conference scheduled for next week, at which policymakers are to discuss goals for the new year.
Authorities aim to reverse the downward trend in the sector and resume normal operations, a person familiar with the matter said.
There is scope for iron ore to rally further due to positive sentiment on China’s shift away from its “zero COVID-19” policy and Beijing’s determination to support the property sector, Citigroup Inc said in a note.
The bank increased its three-month forecast to US$120 a tonne and said prices could climb toward US$150 if China announces meaningful credit easing over the next three to six months or the re-opening accelerates.
Replenishment of iron ore stockpiles remains slower than expected, Minmetals Futures said in a note.
That should help keep prices robust in the short term, it said.
Iron ore rose 2 percent to US$111.25 a tonne in Singapore on Friday, set for a sixth weekly advance. Futures in Dalian, China, climbed 3.1 percent, as steel rebar and hot-rolled coil advanced in Shanghai.
Meanwhile, wheat posted a fifth straight week of losses as prospects brighten for getting global grain shipments out of the war-stressed Black Sea.
The US Department of Agriculture raised its outlook for world wheat trade in part on higher exports from Ukraine and Russia, the agency said in its monthly World Agricultural Supply and Demand Estimates on Friday.
Last month’s extension of a Russia-Ukraine agreement allowing for safe passage of exports from the Black Sea has helped cool off recent price gains, potentially easing a scourge of global food inflation.
A bumper wheat crop in Australia is also sending prices lower.
Despite earlier fears that flooding in parts of eastern Australia would hurt grain quality, reports indicate its not “the nightmare it looked like it could be just last month,” Frontier Futures broker Joe Nussmeier said.
Further pressuring prices is a forecast for beneficial rains in wheat producing US states such as Kansas, said Rich Nelson, chief strategist at commodity brokerage Allendale Inc.
The most active wheat contract in Chicago closed 1.6 percent lower at US$7.3425 a bushel on Friday, while corn gained slightly an soybeans fell.
Other commodities:
Gold for February delivery rose US$9.20 to US$1,810.70 an ounce, posting a marginal weekly gain of 0.06 percent.
Silver for March delivery rose US$0.47 to US$23.72, up 1.99 percent from a week earlier
Copper for delivery in March was unchanged at US$3.88 a pound.
Additional reporting by AP
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