Iron ore advanced from its lowest close in more than six months after President Xi Jinping pledged to achieve economic goals for the year, despite pandemic and property headwinds.

China’s top leader re-iterated the country’s “social and economic development targets” at a business forum on Wednesday, after months of turmoil that’s prompted economists to slash their growth forecasts. Xi’s speech offered the first mention of economic targets since a Politburo meeting in April. Since then, the outlook for China’s economy has darkened amid a series of lockdowns that have hurt manufacturers and sapped consumer sentiment.

The government is pushing banks to step up funding for infrastructure to help stabilize growth and the country probably has to give a major boost to infrastructure and construction spending to meet its goal for the economy to expand 5.5% this year.

Iron ore has tumbled this month — and given up this year’s gains — as doubts grow over whether the country’s languishing property sector can stage a proper recovery from the worst slump on record. Also, commodities are broadly coming under pressure as worries grow over global growth.

Recent declines have taken the steelmaking material to more attractive levels and the price now “reflects the ongoing weakness in the domestic steel market in China,” Citigroup Inc. analysts wrote in an emailed note. The bank sees iron ore rebounding to $140 a ton in the coming three months. 

Iron ore rose as much as 4% to $112.45 a ton in Singapore before trading at $110.80 a ton by 1:17 p.m. local time. Futures in Dalian rose 2.7%, while steel rebar and hot-rolled coil both advanced in Shanghai. 

SOURCE :- bloomberg