The price of iron ore jumped by almost 20% on Monday as investors bet China will stimulate its economy and buoy demand for this key steelmaking ingredient. Iron ore’s surge comes as optimism over Chinese demand helps industrial metals, from copper to tin, bounce back from multiyear lows. Other commodities, including oil, are on the upswing. Ore with 62 percent content delivered to Qingdao jumped 19 percent to $63.74 a dry metric ton, Metal Bulletin Ltd. data show. That’s the biggest gain in daily data going back to 2009 and the highest price since June. The surge was preceded in Asia by a rally in futures, with the most-active contract on Singapore Exchange Ltd. climbing 21 percent to $60 and prices on the Dalian Commodity Exchange rising by the daily limit.
But not everybody is convinced the rallies have legs. Gains in iron ore and some metals may be mainly dependent on Chinese stimulus spending that may not come, analysts say. While Chinese demand for iron ore and some industrial metals is robust, that is mainly as the country takes advantage of cheaper prices to stockpile.
For the same time, the oil price also get positive reacted to this coming information. Along with the oil exporters meeting in the mid of this month, commodities are likely to surge under this environment. It’s more like the countries on this planet are working together to compete with this promising recession.
U.S. oil prices have climbed 45% off a 13-year low reached in February, as investors have focused on talks among producing nations about freezing output and expectations that U.S. production will keep falling. Meanwhile, Oil prices have risen steadily in recent weeks after Russia, Saudi Arabia, Venezuela and Qatar agreed last month to freeze their output at January levels in an effort to support prices. A broader meeting among members of the Organization of the Petroleum Exporting Countries and non-OPEC members is expected to take place this month or next. Demand from China’s economic boost policies and plan is also helping to lift the oil price.