Iron ore prices have dropped from a five-month high, alongside a decline in base metals, after a highly anticipated briefing by China’s top economic planner concluded without the expected new commitments to government spending. This lack of decisive action has left investors disappointed and has sent ripples through wider Chinese markets.
Disappointment Following the Briefing
Officials from the National Development and Reform Commission (NDRC) provided little substance during the briefing, leading investors to express their frustration. Many had anticipated announcements of new stimulus measures coinciding with China’s return from a week-long public holiday. “There had been talk that the NDRC may announce trillions of yuan in stimulus, but it came out with nothing at all,” remarked Hang Jiang, head of trading at Yonggang Resources Co. in Shanghai.
Impact on Iron Ore and Copper Prices
In the wake of the briefing, iron ore futures in Singapore plummeted by approximately 5%, reversing gains made prior to the meeting. Meanwhile, copper prices fell to their lowest level in nearly two weeks amid a broader sell-off across base metals. The disappointment was particularly evident in the steel market, where demand for iron ore has been affected by a protracted property crisis in China.
Investors Await Concrete Economic Signs
Despite the recent slump, iron ore futures remain nearly 20% higher than they were in late September, buoyed by earlier measures from Beijing aimed at revitalizing the economy. However, investors are still seeking tangible evidence that government promises will translate into real economic activity. NDRC officials indicated they would expedite spending, but their comments primarily reiterated earlier pledges regarding investment and support for low-income groups.
“The stimulus from China so far is not going to yield a significant turnaround for base metals,” added Yonggang’s Jiang. “We need to see stimulus feed into a real pickup in consumption before we can see big price rallies.”
Market Reaction and Future Outlook
Following the NDRC briefing, copper and other metals have erased most of their gains made during the days leading up to China’s Golden Week break. Investors expressed disappointment over unmet expectations, with Jia Zheng, head of trading at Shanghai Soochow Jiuying Investment Co., noting that sustaining recent price increases will require additional fund inflows.
As of 3:34 p.m. local time, iron ore fell 4.8% to $105.45 per ton on the Singapore Exchange. Concurrently, copper decreased by 2% to $9,728 per ton on the London Metal Exchange, approaching its lowest closing price since September 23. Other base metals such as aluminum, zinc, and nickel also experienced declines of over 2%.
Continued Support Amid Global Risks
Despite the downturn, Citigroup Inc. noted in a report prior to the NDRC briefing that base metals should receive ongoing support from a significant shift in Chinese policy since last month. However, external factors—including the upcoming U.S. elections, sluggish growth in Europe, and geopolitical tensions in the Middle East—are expected to limit price increases in the near future.
Conclusion
As investors navigate this period of uncertainty, the iron ore and base metals markets remain on shaky ground. The recent NDRC briefing has not only dampened expectations for immediate stimulus but has also highlighted the need for more substantial economic indicators before prices can rally significantly.
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