Iron Ore Prices Rise Amidst Stimulus Hopes in China

Iron ore futures experienced a notable increase on January 13, 2025, reaching their highest value in over a week, fueled by renewed optimism regarding potential economic stimulus measures from China, the world's leading consumer of the commodity. The most actively traded May contract for iron ore on the Dalian Commodity Exchange (DCE) closed with a 1.92% gain, settling at 768.5 yuan (approximately $104.82) per ton. During the trading session, prices peaked at 772.5 yuan per ton, marking the highest level since January 3.

In Singapore, the benchmark iron ore contract for February also saw an increase, rising 1.75% to $98.85 per ton after hitting $100.25 earlier in the session, the highest price recorded since early January.

The head of China's central bank indicated plans to support a moderately accommodative monetary policy aimed at ensuring sufficient liquidity in the market, which has positively influenced investor sentiment. This announcement followed a report from Reuters, which suggested that the central bank might implement its most aggressive monetary measures in a decade this year to stimulate the economy and mitigate the impact of impending tariff increases by the United States.

According to Pei Hao, a senior analyst at Freight Investor Services (FIS), the recent surge in iron ore prices was also linked to the rising costs of oil, following recent sanctions on Russian oil. He noted that in the medium term, iron ore prices may face constraints in both upward and downward movements as consumers have locked in prices, limiting demand.

Despite the recent gains in iron ore prices, steel and raw material prices have seen declines so far this month, attributed to seasonal demand slowdowns. Analysts suggest that steel producers and consumers have largely completed their inventory replenishment in anticipation of production needs during and after the upcoming Chinese New Year holiday, which begins on January 28.

Notably, China's iron ore imports reached record levels in 2024 for the second consecutive year, driven by lower prices and resilient demand, particularly due to strong steel exports amidst ongoing trade tensions.