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Iron ore slumped from a five-month high and base metals fell, as a much-anticipated briefing by China’s top economic planner ended without new pledges to boost government spending.
Officials from the National Development and Reform Commission offered little to investors who had been expecting aggressive stimulus measures to add to a battery of policy moves unleashed in late September to boost a struggling economy.
Iron ore futures in Singapore fell as much as 4% after being up by a similar amount earlier in the session. The briefing was held as China reopened after a week-long public holiday, and investor disappointment was reflected across Chinese markets.
“There had been talk that the NDRC may announce trillions of yuan in stimulus, but it came out with nothing at all,” Hang Jiang, head of trading at Yonggang Resources Co., said from Shanghai.
Iron ore futures have jumped around a fifth from late-September on optimism that Beijing’s earlier moves to boost the economy would end a period of deep gloom for China’s steel industry. Demand for the steelmaking ingredient has suffered amid a years-long property crisis.
But investors are still looking for more concrete signs that the government’s pledges will feed through to real economic activity. The NDRC officials said they would speed up spending, but their comments on investment and support for low-income groups were largely reiteration.
Investors are “disappointed” after putting such high expectations on the NDRC briefing, said Jia Zheng, head of trading at Shanghai Soochow Jiuying Investment Co. Sustaining recent price gains requires more fund inflows, she said.
Iron ore fell 4.8% to $105.45 a ton on the Singapore Exchange as of 3:34 p.m. local time. Copper dropped 2% to $9,728 a ton on the London Metal Exchange to head for its lowest close since Sept. 23, while aluminum, zinc and nickel all lost more than 2%.
Base metals should get ongoing support from the “material shift in China policy” since last month, Citigroup Inc. wrote in a note ahead of the NDRC briefing. But other global risks — from the US election to weak European growth and Middle East conflicts — would likely keep a lid on prices beyond the near term, they said.
“The stimulus from China so far is not going to yield a significant turnaround for base metals,” Yonggang’s Jiang said. “We need to see stimulus feed into a real pickup in consumption before we can see big price rallies.”
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