Commodities prices remained steady after China pledged greater support for its struggling economy. While the finance ministry did not reveal detailed fiscal stimulus plans during a briefing on Saturday, investors were reassured by the government’s commitment to shore up growth, particularly in the crisis-hit property sector and among heavily indebted local authorities. Hints of expanded government borrowing further helped stabilize market sentiment.
Iron ore futures in Singapore reversed earlier losses to rise 0.4% to $106.60 a ton as of 10:02 a.m. local time. The steel-making material has experienced a volatile year, climbing above $140 a ton in January before dipping below $90 in recent months. Copper prices have followed a similar trend, reaching over $11,000 a ton in May before falling back. The three-month contract on the London Metal Exchange saw a slight decline, trading 0.9% lower at $9,707 a ton. Brent crude oil futures also dropped by 1.5%, reflecting uncertainty in the market. China remains the largest importer of these key commodities, meaning its economic health significantly influences global markets.
In recent weeks, metal prices rallied as Beijing implemented several monetary interventions to boost growth.
The government’s focus on revitalizing the property sector is crucial, as housing remains a significant store of wealth for many Chinese citizens. The housing crisis has dramatically reduced the sector’s steel demand, with construction now accounting for 24% of steel consumption in 2023, down from 42% in 2011, according to mining giant BHP Group. Meanwhile, demand from machinery manufacturing and steel exports has increased over the past two years.
Copper, with its diverse applications and its role in the energy transition, remains vital, although construction still accounts for a significant portion of its consumption.
China’s economic challenges, including deflationary pressures, were highlighted by recent price data. Consumer prices rose less than expected in September, and factory-gate prices fell for the 24th consecutive month, underlining the need for further policy intervention.
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