(Reuters) – China’s iron ore futures rose on Tuesday along with other ferrous derivatives amid hopes of stimulus support for the global economy facing recession due to a coronavirus outbreak.
Iron ore prices also got a boost after major supplier Brazil reported a 17.5% month-on-month decline in exports of the steelmaking raw material in February.
The Dalian Commodity Exchange’s most-traded iron ore contract climbed as much as 4.2% to 666 yuan ($95.55) a tonne, adding to Monday’s 3.6% gain. Futures on the Singapore Exchange rose 1.8% to $87.53 yuan.
Iron ore rebounded on Monday from a four-session sell-off on expectations of further government support for the paralysed Chinese economy, and after industry data showed stockpiles at the country’s ports fell further.
“After China’s manufacturing PMI fell to its lowest ever level, expectations that the Chinese government would step in with an aggressive stimulus package rose strongly,” said Daniel Hynes, senior commodity strategist at ANZ in Sydney.
China recorded its sharpest contraction in factory activity in February, triggered by the coronavirus epidemic.
An aggressive fiscal and monetary policy support from the government could fuel a recovery in domestic steel demand that has been weakened by a prolonged Lunar New Year break and restrictions due to the epidemic.
Global stimulus measures should also benefit China, which accounts for more than half of the world’s steel output.
Finance ministers from G7 are expected to hold a conference call on Tuesday, sources said, to discuss measures to deal with the economic impact of the coronavirus outbreak.
“The chorus of central banks saying that they ‘are monitoring the situation closely and stand ready to blah, blah, blah…’ is growing. Markets seem to be enjoying the rhetoric,” said Robert Carnell, head of research, Asia Pacific, at ING.
Link here for full article