Iron ore price surges to 10-week high
The price of iron ore built on recent gains on Wednesday as hopes for a revival of Chinese infrastructure spending boosted commodity markets and the outlook for the sector.
The benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin added 0.5% to $56.90 a tonne, the highest since July 1 according to data provided by The SteelIndex. Iron ore is now trading 29% above record lows for the spot market hit July 8, but remains down more than 18% year to date.
Metal Bulletin's benchmark 62%-index at the ports of Qingdao-Rizhao-Lianyungang in China gained $0.70 to $58.18 while lower grade 58% fines climbed to $51.08.
On futures markets the steelmaking raw material made even more spectacular gains with the most active January-delivery contract on the Dalian exchange surging by the maximum allowed daily before settling slightly below that for a 3.9% gain to $63 a tonne on the day. In Singapore December futures added 3.6%.
The market was buoyed by comments from China's finance ministry late on Tuesday that it would implement stronger financial policies and make timely adjustments to fiscal policy, boost infrastructure spending and speed up reform of its tax system.
The country's central economic planning authority called the National Development and Reform Commission (NDRC) bolstered the announcement by approving two railway projects with a cost of $11 billion yesterday.
Infrastructure spending on some sectors such as telecommunications has only been "30-40 percent" completed, and local governments may speed up investment for the rest of the year, Wang Li, an analyst at CRU Group in Beijing told Reuters:
"There are some uncertainties in the overall economy but the Chinese government has bigger power and influence on the economy so I'm not too bearish," said Wang.
The rally in iron ore also came despite a 14% decline in Chinese imports in August to 74.12 million according to customs data released last weekend although Wang said the sharp pullback could be the result of slower supply growth rather than a collapse of demand. For the first eight months of this year cargoes have been flat at 613 million tonnes compared to a record-breaking 2014.