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Highlights
- Iron ore prices expected to hit $US120 as China boosts stimulus measures.
- China's stimulus package could drive further gains in base metals.
- Economic policy announcements are set to impact commodity markets.
Iron ore prices are expected to climb to $US120 per tonne as China’s economic stimulus measures gain momentum, according to recent forecasts. Citi analysts anticipate a short-term boost in commodity markets, driven by Beijing’s shift in policy, which could also elevate copper prices to $US10,500. This positive outlook comes as China reopens its markets following the Golden Week holiday.
The National Development and Reform Commission (NDRC) is set to provide an economic briefing, which many believe could reveal a significant public spending package. This anticipation has already pushed iron ore futures above $US110 per tonne, with further gains seen in the near future. Markets are particularly optimistic about a potential 10 trillion yuan ($2.1 trillion) stimulus plan, equivalent to 10% of China’s GDP, over the next two years.
While there is enthusiasm surrounding China’s potential policy announcements, market experts warn that a failure to meet expectations could lead to a pullback in commodity prices. Factors such as a potential US recession and geopolitical tensions in the Middle East could also impact global markets.
Citi analysts expect Chinese policymakers to continue supporting the market, possibly through additional measures. Meanwhile, other forecasts from Morgan Stanley suggest iron ore prices could climb higher by the end of the year, supported by strong fundamentals and improving demand in sectors like construction and manufacturing.
China’s property market, which has been a key focus of recent government initiatives, shows signs of recovery. Visits to property sales centers surged during the Golden Week holiday, reflecting the impact of measures such as lower mortgage rates and relaxed purchase restrictions in major cities.
Supply growth in the iron ore market is also slowing, with stockpiles at ports declining in recent weeks. These developments, along with improving steel demand, are contributing to a positive outlook for iron ore prices in the near term.
With China’s stimulus measures potentially driving demand for iron ore and base metals, market watchers remain focused on upcoming economic announcements that could shape commodity markets in the weeks ahead.
