Chinese futures jumped for the fifth consecutive trading day on anticipation of further infrastructure stimulus introduced during the National’s People Congress.
Thus, the most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), for September delivery, hiked further by 3.64% day-on-day to RMB 711 per tonne on Tuesday.
Similarly, the steel rebar contract on the Shanghai Futures Exchange also increased by 1.42% day-on-day to RMB 3,562 per tonne.
Infrastructure stimulus hype
The speculative trading was due to market expectation of some concrete plans to be rolled out by the Beijing policymakers in upcoming meeting of National’s People Congress at late May.
Development of western regions are estimated to focus point of the infrastructure packages, according to trade sources.
Besides, further fiscal stimulus policies are expected to be introduced as well to kickstart the weaken coronavirus-hit economy.
These anticipations were grounded on the fact that Beijing policymakers had been very quiet in stimulus spending as compared to other major world economies during the pandemic.
For instance, the US had approved a $2.3 trillion rescue package, while Japan at $1 trillion to mitigate the negative economic effects of coronavirus pandemic.
Rising China’s domestic iron ore production in line with steel output
With better steel margins, China’s domestic production of raw iron ore had increased in April, up 11.2% year-on-year, according to the country’s National Bureau of Statistics (NBS).
As such, the raw iron ore production went up by 3% year-on-year to 262.74 million tonnes for the first months of 2020.
Thus, the higher domestic production level was tandem to the country’s crude steel output which also rose by 1.3% year-on-year to 319.46 million mt for the Jan-Apr 2020 period.