Iron ore futures extended bullish run and closed the session on gains, after stabilization of Covid cases in major cities like Shanghai and Beijing suggested some easing of pandemic restrictions.
The futures of Dalian Commodity Exchange (DCE) for May delivery rose by 3.53% day-on-day or up RMB 29 to RMB 851.50/mt, during the day trading session on Thursday.
The rebar futures however inched down by 0.33% or down RMB 16 day-on-day to RMB 4,850/mt, during the day trading session.
More relaxation for lockdown measures in China
There were some hints of easing of the lockdown in Shanghai, after the city experienced a fourth day of falling Covid cases to around 13,500 cases, while cases remained low in Beijing at below 50 cases.
The downtrend of cases may lead city authority to loosen movement restriction cases that had disrupted logistics and flows of raw materials from ports to industrial parks.
However, Chinese ports remained congested and poised huge problem in slowing down the flows of good. As IHS Markit Commodities at Sea estimated that the total congestion level had increased by 30-40% at the ports of Shanghai since the start of March 2022.
Moreover, the data also showed that the vessel capacity arrivals into Chinese ports to load or discharge cargo have decreased by 11% to about 1.15 billion deadweight during Q1 2022 as compared to 1.28 billion deadweight recorded during the first quarter of 2021.
Beijing policymakers to stimulate economy with infrastructure construction
The Chinese government had pledged to promote infrastructure construction to stimulate the domestic economy, which was embattled by the recent fresh round of Covid outbreaks that resulted in largescale lockdown measures.
Earlier this week, the country’s Central Financial and Economic Affairs Commission held meeting to discuss ways to boost domestic economic and social development that sent some market optimism to the market.
In the meantime, Chinese mining industry also recorded a 147.8% on-year gain in gross profits to RMB 383.5 billion or $58.23 billion over the Jan-Mar 2022 period, according to National Bureau of Statistics (NBS).
According to the statistics, some sizable Chinese industrial firms also posted gains in Q1, with their gross profits rose by 8.5% on-year to a total of RMB 1.9 trillion or $298.4 billion.