Iron ore up as China emerges from COVID malaise

The price of iron ore has been driven higher as Chinese officials vowed to enact an array of government policies that will stimulate growth following the country’s worst COVID outbreak in two years.

The steel-making ingredient rose $US6.80 a tonne overnight to reach $US142.20/t. Bellwether metal copper was also up more than 5 per cent, rising to $US9498.50/t.

The improved prices came amid optimism about higher demand as Premier Li Keqiang called on ministers to avoid a COVID-fuelled economic contraction this quarter.

Ministry of Finance authorities said on Thursday they would accelerate refunds of value-added taxes, make it easier for small companies to bid on government purchasing projects, and ensure that local special bonds — which are mainly used to fund infrastructure projects — are issued in a smooth manner, according to a ministry briefing.

At a separate press conference, People’s Bank of China officials promised to step up their plans to implement monetary policy to help maintain growth.

The urgency with which government authorities talk about the economy has been intensifying in recent weeks, with Premier Li late last month urging thousands of local officials at an emergency meeting to prevent economic growth from slipping out of a reasonable range.

The State Council, China’s cabinet, has also released a list of 33 measures to support the economy and offset COVID-related damage, including additional tax breaks and favourable loans.

The country’s worst virus outbreak in two years has been easing and some of the toughest anti-COVID restrictions — including Shanghai’s months-long lockdown — have been lifted, but the government’s growth target of about 5.5 per cent this year remains difficult to achieve.

Officials at Thursday’s events didn’t announce any new policies, but they did suggest authorities are heeding Premiere Li’s call to bolster growth.

with Bloomberg