By Enrico Dela Cruz
Feb 15 (Reuters) - Dalian iron ore futures climbed more
than 3% on Wednesday, while the Singapore benchmark price for
the steelmaking ingredient extended gains, following the Chinese
central bank's move to inject additional liquidity into the
banking system.
The People's Bank of China (PBOC), as expected, boosted
medium-term liquidity on Wednesday, with the operation resulting
in a net 199 billion yuan ($29.16 billion) of fresh fund
injection, while keeping the interest rate unchanged. Markets had hoped the PBOC would pump more cash into the
banking system after money conditions became unexpectedly tight
at the start of February and to support the economic recovery
after Beijing dismantled strict COVID-19 curbs.
The most-traded May iron ore on China's Dalian Commodity
Exchange rose up to 3.1% to hit 873 yuan ($127.92) a tonne in
early trade.
On the Singapore Exchange, iron ore's benchmark March
contract jumped 1.5% to $124.30 a tonne.
Steel benchmarks also rose on the Shanghai Futures Exchange,
with rebar up 1.8%, while hot-rolled coil climbed 1.5%, wire rod added 1.1%, and stainless steel edged up 0.5%.
Other Dalian steelmaking inputs were also higher, with
coking coal and coke up 2.3% and 1.5%,
respectively.
The liquidity boost in China, the world's top steel
producer, followed a record increase in new bank loans in
January.
But analysts said ferrous commodities' prices in China may
remain range-bound as market fundamentals offer not much support
at the moment, with iron ore port inventory in China hitting a
five-month peak last week and the optimism around Chinese steel
demand tempered by a subdued property market.
"Chinese demand is expected to be broadly flat with the
weakness in China's property market offset by a pick-up in
infrastructure," said Westpac senior economist Justin Smirk who
expects iron ore prices to settle at $100 a tonne by yearend.
(Reporting by Enrico Dela Cruz in Manila; Editing by Rashmi
Aich)
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