Iron ore hits 1-week high on China stimulus, easing COVID curbs

Iron ore futures in Dalian and Singapore climbed on Monday to their highest levels since May 23, extending a relief rally spurred by easing COVID-19 curbs in top steel producer China and government efforts to shore up the battered domestic economy.

The most-traded September iron ore on China's Dalian Commodity Exchange jumped as much as 3.9 per cent to 887.50 yuan ($133.16) a tonne, before ending daytime trade at 878 yuan, up 2.8 per cent.

On the Singapore Exchange, the steelmaking ingredient's most-active June contract rose 1.5 per cent to $135 a tonne by 0702 GMT. It hit a one-week high of $135.30 earlier in the session.

"The moment the iron ore market has been waiting for has finally arrived, with falling national caseloads and a telegraphed reopening of Beijing and Shanghai," said Atilla Widnell, managing director at Navigate Commodities in Singapore.

From a March 7 peak of $163 a tonne, the spot price of benchmark 62 per cent-grade iron ore bound for China has fallen to $133.50, as of Friday, SteelHome consultancy data showed.

Authorities in China's commercial hub of Shanghai will cancel many conditions for businesses to resume work from Wednesday, easing a city-wide lockdown that has added to a slowdown in the world's second-biggest economy.nL1N2XL067]

Shanghai officials have also announced an action plan to boost the economy, including accelerating the issuance and use of local government bonds, and asking banks to renew loans for small- and medium-sized enterprises.

But a meaningful rebound maybe still be months away.

"Phased reopenings are unlikely to bring an immediate V-shaped economic recovery, given that it will be slow, steady and cautious to prevent a relapse," Widnell said.

Construction steel rebar on the Shanghai Futures Exchange rose 1.3 per cent, while hot-rolled coil gained 1.2 per cent. Stainless steel advanced 2.1 per cent.

Dalian coking coal climbed 3.9 per cent and coke jumped 3.8 per cent.