Iron ore prices continue to soar after China eases home buying policy

This has fueled hopes that the property market will recover, boosting demand for steel and iron ore.

According to Bloomberg, iron ore prices have risen nearly 11% after China's three biggest cities eased home-buying policies, boosting the outlook for iron ore demand in the world's largest steel-producing nation.

Shanghai, Guangzhou and Shenzhen have eased regulations, continuing Beijing's efforts to support the struggling property sector.

Iron ore futures on the Singapore Exchange surged to their highest since July. Copper and zinc also rose on the London Metal Exchange.

Iron ore — one of the worst-performing major commodities this year as China's economy slows — has rebounded as Beijing takes a more aggressive approach to stabilizing the economy. At the heart of these efforts are initiatives aimed at pulling the property market out of a multi-year slump that has hurt business.

“China’s economic stimulus measures have been much stronger than expected, and there are expectations of further fiscal policies. The steel market is now entering a peak period, and rebar is being consumed rapidly,” said Steven Yu, a researcher at Mysteel.

Guangzhou was the first first-tier city to completely lift restrictions on homebuyers. Shanghai and Shenzhen also announced that they would reduce the minimum down payment for first and second home purchases to 15% and 20%, respectively. The People’s Bank of China has also allowed refinancing of home mortgages.

Iron ore rose 8.4% to $110.65 a tonne at 9:25 a.m. in Singapore on Sept. 30, after jumping as much as 10.6% earlier in the session. The gain followed an 11% gain last week. Copper rose 1% to $10,083.50 a tonne on the London Metal Exchange, and zinc rose 0.7%.

The property downturn is a major challenge for China’s steel industry, which is a major source of demand. Major steel mills have cut production and warned that the industry’s situation is worse than during the major crises of 2008 and 2015.

On the supply side, iron ore production is expected to remain ample, with Brazil and Australia — home to the world’s four largest exporters — already ramping up production.

Vietnambiz