Iron ore futures prices closed higher for a fifth straight session on Tuesday, buoyed by expectations of further stimulus after Beijing unveiled a $170 billion hydropower project to boost economic growth.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange traded 2.49% higher at 823 yuan ($114.72) a metric ton.

The benchmark August iron ore (SZZFQ5) on the Singapore Exchange was 1.61% higher at $105.15 a ton, as of 0745 GMT.

“Iron ore futures extended recent gains amid prospects of additional stimulus measures, with Beijing’s announcement of the $170 billion hydropower project promising to deliver a positive economic boost for steel,” ANZ analysts said in a note.

The move has also sparked optimism that the government may be reverting to traditional fiscal stimulus strategies to bolster economic growth, ANZ said, with positive sentiment further supported by ongoing efforts to reduce excessive competition and overcapacity in the steel industry.

The Chinese government’s continued efforts to curb “involution-style” competition among industrial enterprises reinforced market optimism, said consultancy Mysteel.

This competition is characterised by overcapacity among manufacturers and price cuts to clear excess stock, which have sparked price wars across various industries in China.

Meanwhile, Chinese steelmakers are bypassing tariffs by exporting semi-finished steel billets, which are not subject to the same trade restrictions as finished steel products in many countries. This strategy has contributed to the sharp rise in exports from the world’s largest steel producer.

Other steelmaking ingredients on the DCE spiked, with coking coal and coke (DCJcv1) both surging 7.98%.

Coking coal futures in China reached their highest level since March 19, as rumours of a government inspection into possible overproduction sparked concerns about potential supply disruptions.

Steel benchmarks on the Shanghai Futures Exchange all increased. Rebar hiked 3.12%, hot-rolled coil EHR1! jumped 2.84%, wire rod (SWRcv1) shot up 4% and stainless steel climbed 0.47%.
Source: Reuters