Since the end of September, the market has shown significant growth amid the recovery of the Chinese economy and raw material prices have continued to rise, reaching their highest level in three months amid hopes for the stability of the Chinese economy, especially in the real estate sector.
January futures for iron ore, the most traded commodity on the Dalian Commodity Exchange from September 30 to October 7, settled at 821.5 yuan/ton (US$117.14/ton). Prices remained unchanged amid the Golden Week holidays in China. Meanwhile, on the Singapore Exchange, November core futures prices fell slightly during this period – by 3.4%, to $108.2 per ton.
In late September, the Chinese government announced a new package of stimulus measures to support the construction sector. These requirements included a lower down payment for home purchases and more favorable loan terms. These steps boosted construction activity and increased demand for steel and iron ore, which had a positive impact on the commodity market.
However, even amid the optimism generated by the new stimulus, investors remain cautious. The challenges facing the Chinese economy, in particular the high level of developer debt, could lead to unstable demand for iron ore in the medium term. Analysts also point out that for the market to grow steadily and sustainably, other sectors of the economy, such as manufacturing and technology, need to start showing recovery as well.
