Iron Ore and Copper Prices Plummeted, What Will Happen Next?

铁矿石、铜价暴跌,接下来会怎么样
Published on: Oct 8, 2024
Author: Amy Liu

Iron ore has fallen significantly from its five-month high, accompanied by a drop in the prices of basic metals. Investors were initially hopeful that aggressive stimulus measures from China would supplement a range of policies set to be announced by the end of September, aimed at revitalizing the struggling economy.

Iron ore futures in Singapore dropped by 4% after earlier gains in the morning session. Hang Jiang, trading manager at Yonggang Resources, noted, “There are rumors that the National Development and Reform Commission may announce trillions of yuan in stimulus measures, but in the end, nothing materialized. So far, China’s stimulus efforts have not brought significant changes for basic metals. We need to see how these measures genuinely boost consumption before we can expect substantial price increases.”

This situation reflects uncertainty in market expectations and a cautious stance among investors regarding the effectiveness of future policies.

Iron ore futures have risen by about one-fifth since the end of September, as the market optimistically believes that earlier measures taken by Beijing to boost the economy will end the downturn in China’s steel industry. Demand for steelmaking raw materials has been impacted during China’s years-long real estate crisis. However, investors are still looking for more tangible signs that the government’s commitments will translate into actual economic activity. Officials from the National Development and Reform Commission (NDRC) have stated that they will accelerate spending, but their comments on investment and support for low-income groups mainly reaffirm existing commitments. Sustaining the recent price increases will require more influx of capital.

As of 12:14 PM local time, iron ore prices on the Singapore Exchange fell by 2.9% to $107.50 per ton. Copper prices on the London Metal Exchange dropped 1.3% to $9,797.50 per ton, marking the lowest closing price since September 24, with aluminum and zinc also declining more than 1%.

In a report released ahead of a press conference by the NDRC, Citigroup stated that since last month, “significant shifts in Chinese policy” should continue to support prices for base metals. However, other global risks—from the U.S. election to sluggish economic growth in Europe and conflicts in the Middle East—could suppress price increases in the short term.

Base Metals Copper Iron Personal Finance