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Iron ore price jumps as China vows to stabilize economy

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Iron ore price rose on Monday as a pledge by the Chinese government to focus on economic stability next year bolstered demand outlook.

China pledged to continue its prudent monetary policy and proactive fiscal policy, and to prioritize economic stability in 2022, according to the annual Central Economic Work Conference last week.

“The supply-side of iron ore is not expected to see a big change next year, with shipments from mainstream miners to remain stable while output from domestic mines will see little change,” said Cheng Peng, an analyst with SinoSteel Futures.

“The main factor to affect iron ore prices will be demand, which is more flexible pending the property market policy.”

Benchmark iron ore futures on the Dalian Commodity Exchange, for May delivery, closed 5% higher at 669 yuan a tonne after rising as much as 5.9% to 674 yuan ($105.93).

Iron ore futures in Singapore soared as much as 7.2% to $116.15 a tonne.

Iron ore has been on a tumultuous ride this year as a slew of output and pollution curbs hit consumption and turmoil in the property industry damped construction activity. The steel-making ingredient has roughly halved from its peak in May, though it has been supported recently by improved demand.

“The focus of the market recently is back on the policy side,” according to Huatai Futures.

“While weak property data have dragged down the ferrous metals market, the outlook for next year is not that pessimistic based on the overall ‘stability’ goal in China.”

(With files from Reuters and Bloomberg)

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