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Chinese iron ore rises as investors see long-term policy benefits

Date:15/11/2013   View: 1119   Tags: Iron Ore ; Policy Benefits
Chinese iron ore futures rose more than 1 percent on Wednesday as investors focused on the long-term benefits from a pledge by leaders to let markets play a "decisive" role in the economy,  even if it was short on detail.

    China's leaders unveiled a reform agenda for the next decade  at the end of a four-day meeting of the ruling Comunist Party in a statement that said Beijing aimed to achieve "decisive results" in its reform push by 2020.   

    "We should not be disappointed with its lack of quantitative details but be confident in future reform with the rollout of the blueprint," said Helen Lau, a mining analyst for UOB-Kay Hian Securities in Hong Kong.

    "With the announcement of the communique, policies announced or to be announced on regulating the commodity sector will gain more governmental support in execution in our view, hence we expect a more forceful implementation ahead."

    The most traded iron ore for May delivery on the Dalian Commodity Exchange was up 1.1 percent at 949 yuan ($156) a tonne by the midday break.

    On the Shanghai Futures Exchange, the most active May rebar contract was off 0.1 percent at 3,665 yuan per tonne. 
    "I think the reform intentions will have a positive effect on the economy in the long run," said Ting Zhou, an analyst at Jinrui Futures in Shenzhen. 

    Elsewhere, however, investors disappointed by the lack of detail in Beijing's reform plans and by an apparent reluctance to overhaul the state sector sold Chinese stocks.

    In the short term, seasonally slow steel demand in China as cold weather curbs construction activity in November and December will keep prices in narrow ranges, said Zhou, who sees gains for rebar capped at 3,750 yuan.

    In the iron ore spot market, Chinese appetite was small, with ore for immediate delivery to China's Tianjin port unchanged at $135.90 a tonne for the second day on Tuesday, according to data compiler Steel Index.

    Chinese buying interest for iron ore has stalled, traders said, after mills snapped up cargoes last week that lifted prices to a two-month high of $137.10 a tonne on Nov. 6. 

    "Buying interest at ports (in China) for stockpiled iron ore imports slowed with mills sufficiently well supplied for now, but sellers held prices firm," Steel Index said.   

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