Chinese futures spiked up further, over tight supply concerns and expectation of more Chinese stimulus measures.
The most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), for September delivery, jumped by 2.05% day-on-day to RMB 722 per tonne on Thursday.
On the contrary, the steel rebar contract on the Shanghai Futures Exchange increased slightly by 0.82% day-on-day to RMB 3,568 per tonne.
China seeks to focus on property sector during the Two Sessions
In a bid to increase domestic consumption, some market participants expected the Beijing policymakers to introduce measures to support the property sector in the Two Sessions.
The Chinese government may seek to increase sales of subsidized homes to low-income groups and renewals of old district with easing of fiscal policy by Chinese banks.
Then, the Beijing policymaker may focus on the development of commercial and industrial properties to boost health care, tourism and new infrastructure such as 5G internet services and new energy vehicles.
The property sector had contributed 7% of China’s GDP last year, and property sales had recovered to almost 2019 levels in April 2020, with new homes prices rose by 0.4% on-month among 70 major Chinese cities.
Ease of custom checks to facilitate iron ore trading
China’s custom checks for iron ore had become optional with effect on June 1, as Chinese authority sought to streamline services and facilitate trading.
According to the country’s General Administration of Customs (GAC), the imported iron ore can be directly released from customs after passing the on-site inspection and quarantine.
However, most traders normally will opt for quality specification inspection for imported iron ores to protect themselves from shoddy cargoes and the inspection period may take around 1-2 days.
Thus, the new ruling allowed buyers to skip the process in saving time and costs, as iron ore products such as Pilbara Blend fines and Carajas fines tend to have stable quality specifications