Iron-ore rises past $110 as Xi pledges to meet economy targets

23rd June 2022 By: Bloomberg

Iron-ore advanced from its lowest close in more than six months after President Xi Jinping pledged to achieve economic goals for the year, despite pandemic and property headwinds.

China’s top leader re-iterated the country’s “social and economic development targets” at a business forum on Wednesday, after months of turmoil that’s prompted economists to slash their growth forecasts. Xi’s speech offered the first mention of economic targets since a Politburo meeting in April. Since then, the outlook for China’s economy has darkened amid a series of lockdowns that have hurt manufacturers and sapped consumer sentiment.

The government is pushing banks to step up funding for infrastructure to help stabilize growth and the country probably has to give a major boost to infrastructure and construction spending to meet its goal for the economy to expand 5.5% this year.

Iron-ore has tumbled this month -- and given up this year’s gains -- as doubts grow over whether the country’s languishing property sector can stage a proper recovery from the worst slump on record. Also, commodities are broadly coming under pressure as worries grow over global growth.

Fiscal support in China remains elusive and a softening in other raw materials including coking coal -- coupled with poor downstream steel demand -- has pulled the plug on investor confidence in the iron-ore market, Minmetals Futures wrote in a note. The near-term outlook remains bearish, it said.

Iron-ore rose as much as 4% to $112.45 a ton before trading at $111.30 a ton by 12:30 a.m. local time. Futures in Dalian rose 2.7%, while steel rebar and hot-rolled coil both advanced in Shanghai.