Iron ore
prices rose to their highest in more than four weeks on Monday, extending last
week's solid gains spurred by hopes of increased Chinese infrastructure
spending and prospects of property sector bailouts.
Aug 1 (Reuters) - Iron ore prices rose to their highest in more than four weeks on Monday,
extending last week's solid gains spurred by hopes of increased Chinese
infrastructure spending and prospects of property sector bailouts.
The most-traded
iron ore, for September delivery, on China's Dalian Commodity Exchange DCIOcv1 jumped 4.7% to 817.50 yuan ($121.15) a tonne
in early trade, its strongest since June 30.
On the Singapore
Exchange, the steelmaking ingredient's front-month September contract SZZFU2 climbed by up to 5.2% to $120.95 a tonne, also the
highest since June 30.
China has urged
local governments to speed up the use of special bonds for infrastructure that
are mature and profitable, state media reported on Friday, following a cabinet
meeting.
Fitch Ratings
said it expects the Chinese government to roll out more financial support to
boost infrastructure investment after this year's special-bond issuance quota
was almost filled by end-June.
Iron ore's gains
last week were partly driven by reports about an up to 300 billion yuan ($44.47
billion) rescue fund for ailing Chinese property developers.
China's policy
banks were also reportedly planning to issue 800 billion yuan of credit
facilities to help fill the funding gap for major projects and stimulate
infrastructure investment.
"Fitch
believes the government may take more steps beyond these to revitalise the
economy after recent lockdowns to control COVID-19 outbreaks, weakness in the
property market and rising unemployment," the agency said in a statement.
Construction
steel rebar on the Shanghai Futures Exchange SRBcv1 rose 1.9%,
hot-rolled coil SHHCcv1 climbed 1.4%, and
stainless steel SHSScv1 advanced 3.1%.
Dalian coking
coal DJMcv1 gained 1.8% and coke DCJcv1 added 3.3%.
But analysts
warned of continued market volatility, with the Chinese government and steel
industry reportedly agreeing to mandate further steel production cuts in the
second half of 2022.
That could mean
"more pain" for producers of steelmaking ingredients, said Navigate
Commodities Managing Director Atilla Widnell.
($1 = 6.7455
Chinese yuan)
(Reporting by
Enrico Dela Cruz in Manila; editing by Uttaresh.V)