FX.co ★ Iron Ore Stabilizes on Policy Support Hopes

Iron ore futures stabilized above CNY 760 per ton after recently hitting multi-week lows, as sentiment found some support from the People’s Bank of China’s pledge to deliver additional financial backing to shore up domestic demand. The commitment comes against a backdrop of excess industrial capacity and subdued consumption, both of which continue to dampen business confidence and cloud the growth outlook.

Latest data showed that consumer prices in January rose by less than expected, while producer prices remained in deflation for a 40th consecutive month, highlighting persistent disinflationary pressures in the world’s second-largest economy. Market participants are now focused on a key parliamentary meeting in Beijing next month, where authorities are expected to set annual economic targets and could introduce new stimulus measures.

At the same time, demand conditions in top importer China have softened, with manufacturers scaling back operations ahead of the extended Lunar New Year holiday period. On the supply side, pressures have intensified as major exporters Australia and Brazil increased iron ore shipments in late January.