(Bloomberg) – Iron ore futures rose in Singapore as concerns about the impact on the economy of the delta variant eased and prospects for further stimulus in China sparked a rally in industrial metals markets.
Singapore futures rallied up 11% on Tuesday as the potential boost from US vaccinations boosted sentiment in financial markets. China’s success in quelling the Covid-19 outbreak has bolstered the outlook for commodities, from copper to oil.
Iron ore’s recovery came after it lost about a quarter of its value last month, as pressure from China to curb steel production dogged demand.
But steel and other industrial commodities rebounded this week after Covid’s daily case count in China dropped to zero and the country’s central bank pledged to increase support for the real economy.
Coking coal in China set a record on Tuesday, while copper also rallied amid signs that Chinese consumers are on a buying spree.
“After the rise in coal product prices over the past two days, it’s hard for iron ore to keep quiet,” Xiaoyu Zhu, metals operator at StoneX Financial, said in an email.
Still, market watchers are pointing to more volatility amid a complex political landscape in China, as well as an uneven global recovery.
In China, “people are waiting for more stimulus to target the infrastructure sector as real estate and manufacturing are looking bleak,” said Erik Hedborg, principal analyst at CRU Group.
“In the rest of the world, we are seeing steel production stabilizing at levels below pre-pandemic levels.”
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