Iron ore on the rise as China adds to stimulus with cuts in lending rates

Iron ore futures in Asia rose Monday as the latest rate cut in top metals consumer China helped boost sentiment, but gains were limited by doubts over the effects of the move on the steel market.

China cut benchmark lending rates in a highly anticipated move, as part of the government’s broader package of stimulus measures aimed at reviving the ailing economy.

“While the focus on reducing inventory is likely to speed up the recovery, it will have little impact on steel and iron demand in the short term,” ANZ analysts said.

According to Reuters, the most-actively traded January iron ore contract (SCO:COM) on China’s Dalian Commodity Exchange ended daytime trading +1.4% at 769.5 yuan/metric ton (~$108), while benchmark November iron ore on the Singapore Exchange recently was +0.4% at $102.10/ton.

Potentially relevant stocks include Rio Tinto (NYSE:RIO), BHP (BHP), Vale (VALE), Fortescue (OTCQX:FSUMF), Glencore (OTCPK:GLCNF) (OTCPK:GLNCY) and Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY).

Separately, the World Steel Association said China will account for less than half of global consumption in 2024 for the first time in six years, as the country’s weakening real estate sector hits demand for the metal.

Worldsteel forecasts Chinese consumption declining for a fourth straight year in 2024 to 869M tons, while demand in the rest of the world climbs 1.2% to reach 882M tons, with China’s share shrinking further in 2025.