Iron Ore Prices Improve amid Talk of China Stimulus Package

At time of writing, iron ore prices (62% fines CFR North China) are surging to their highest price since 27 March, trading at $70.09.

This is according to the Platts index, one of the five major indices used to track iron ore prices.

Free Report: 10 ASX-listed mining stocks that could make you huge money in the next 12 months and beyond. Get access now.

trading view iron ore


What is making iron ore prices rise?

The price surge has been underpinned by speculation that China will unveil an economic stimulus package.

This mooted move would combat increased pressure on the Chinese economy amid heightened trade tensions with the US.

An opinion piece in the state-backed Global Times wrote:

Beijing must draw up strong stimulus policies to inject new momentum into the real economy.

This proposed move would mimic a $578 billion stimulus move in 2008 during the GFC.

China considering further stimulus could be good for iron ore

Further signs that China is considering a stimulus package can be found in the move to cut banks’ reserve requirement ratios (RRRs).

A reserve requirement ratio is basically how much banks, in this case in China, must hang onto rather than lend or invest.

The decision by the People’s Bank of China represents a loosening of credit conditions and a $109.2 billion (US) injection of funds into the Chinese banking system.

With more money in the tank, it could point to further growth in iron ore prices as demand increases from the world’s largest producer of steel.

This would likewise improve the share price of Australia’s largest iron ore miners, companies like Rio Tinto, BHP Billiton and Fortescue Metals.

At time of writing, all three of these companies are trading higher.


Ryan Clarkson-Ledward,
Markets & Money

PS: 2018 Mining Boom: Could these 10 cheap, top-quality Aussie mining stocks lead this year’s commodities comeback? Find out here.

Markets & Money is unlike any other finance newsletter. Our mission is to look at the world of investments and finance in a sceptical and contrarian way. Our editorial team looks beyond the headlines and obvious explanations to bring you what we think is really moving the market. More importantly, we’re trying to show you where the next big opportunities and where the big risks are that you might not be aware of. In Markets & Money you’ll read about the state of the Australian housing market, the future of the commodity boom, China’s rise to an economic superpower, the fate of the US dollar, and of course a whole lot more.

Leave a Reply

Your email address will not be published. Required fields are marked *

Markets & Money