Dalian iron ore hits 7-month high on China’s liquidity support
Band Enrico Dela Cruz
March 28 (Reuters) – Dalian iron ore soared around 6% on Monday and the Singapore Stock Exchange’s benchmark rebounded above $150 a tonne as traders cheered China’s decision to raise its injection of short-term funds to counter any possible shortage of liquidity in the market.
Other steel ingredients traded on the Dalian Commodity Exchange and steel prices on the Shanghai Futures Exchange also rose, despite risk aversion sentiment in other assets amid heightened COVID-19 restrictions in China.
Dalian’s most traded iron ore, for delivery in September DCIocv1rose 5.9% to 882.50 yuan ($138.46) a ton, its highest level since Aug. 30.
The most active May contract for iron ore on the Singapore Stock Exchange SZZFK2 gained 1.7% to $156.85 a tonne.
“The market initially sold in the first 15 minutes, but has since reacted very positively to the injection of 150 billion renminbi into seven-day reverse repos this morning by the People’s Bank of China – bolstering short-term liquidity. term before the end of the current quarter,” said Atilla Widnell, managing director of Navigate Commodities in Singapore.
“More aggressive liquidity injections provide the market with a degree of comfort and confidence that local banks will not face a funding crunch,” he said.
China will also soon put in place measures to make it easier for private companies to issue bonds, China’s securities regulator said on Sunday.
Heightened coronavirus restrictions in China’s top steel producer, with financial hub Shanghai launching a two-stage lockdown of the city of 26 million, could further dampen growth prospects for the world’s second-largest economy.
15% drop in Shanghai nickel SNIcv1 after the commodity stainless steel posted a record weekly gain on Friday, also prompted profit-taking on Shanghai stainless steel futures. The reference contract SHSScv1 fell 6.3%.
Structural steel rebars at the Shanghai Stock Exchange SRBcv1 gained 1.8%, while hot rolled coils SHHCcv1 advanced by 1.5%.
Dalian Coking Coal DJMcv1 climbed 1.4% and Dalian coke DCJcv1 added 1.1%.
(Reporting by Enrico Dela Cruz in Manila; Editing by Rashmi Aich)
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