Iron ore prices remain stable with hopes of stimulating the real estate sector

Iron ore futures prices remained practically stable this Tuesday after registering a strong increase the previous day, as investors reacted to the proposed real estate stimulus measures and the refueling of plants after the holiday.

The September contract for the most traded iron ore on China’s Dalian Commodity Exchange (DCE) ended the day’s trading down 0.06%, at 886.5 yuan ($122.88) a ton.

Prices rose 2.63% on Monday, the first day of trading since the end of China’s five-day Labor Day holiday in early May.

China’s Politburo said in a statement on April 30 that authorities should conduct research on policies and measures to reduce housing stock to prevent and diffuse risk in the housing market, raising hopes of more stimulus.

“There will still be some increase in demand in the future, and iron ore supply and demand will be strong,” analysts at information provider Shanghai Metals Market said in a note.

Market confidence was boosted by increased issuance of special bonds, they said.

Research by consultancy Mysteel showed that production of hot metals during the five-day holiday period increased by 0.9% from the pre-holiday level, reaching an average of 2.33 million tonnes per day.

The purchasing managers’ index for the steel industry in the Hebei region, China’s biggest steel producer, rose 12.7 percentage points in April to reach 60.3, according to data from the Hebei Metallurgical Industry Association, indicating a strong improvement in sentiment in steel mills.

Metallurgical coal advanced 1.01% this Tuesday, while coke fell 0.25%.