(Bloomberg) -- Iron ore rallied for a second day on speculation that China’s mammoth stimulus package would help to bolster demand. Base metals drifted lower after strong gains on Tuesday.
The steelmaking material briefly rose above $99 a ton in Singapore before paring gains. It closed almost 6% higher in the previous session after Beijing unveiled a broad suite of measures to support Asia’s largest economy, with a particular focus on the real estate market.
The rebound has raised the possibility that prices may have the momentum to push back into three figures. However, iron ore is still down by more than a fifth since late May on China’s slowdown, a crisis rippling across the nation’s vast steel industry, and robust supplies from producers in Brazil and Australia. Huatai Futures Co. was among those striking a wary note.
“Driven by the macro stimulus, ferrous products are having strong run in the short term, but the spot market is still cautious,” it said in a report. “If demand for steel products doesn’t improve notably, the supply and demand for iron ore will not reach a balance. The downside risk still exists.”
Singapore iron ore futures rose 1.8% to $96.45 a ton as of 11:28 a.m. in London, after being up almost 5%. In China, yuan-priced futures closed up 1.4%, while steel contracts were little changed.
Base metals gave up early gains to trade lower on the London Metal Exchange, after Tuesday’s biggest surge in the catch-all LMEX Index since late July. Copper fell 0.3% to $9,770.50 a ton, after earlier rising as much as 1.2%. Aluminum retreated from the highest level since June, while zinc slipped back below $3,000 a ton.
--With assistance from Jessica Zhou, Martin Ritchie and Mark Burton.
©2024 Bloomberg L.P.