Iron ore climbs on PBOC reserve cut, US-China trade talks

Iron ore climbed as China reduced its policy rate and lowered the amount of cash lenders must keep in reserve, at the same time as Washington and Beijing agreed to trade talks.

Futures of the steel-making staple rose as much as 2.4% as China’s central bank chief and other top officials announced the easing measures, ramping up efforts to help the economy caught in a trade war with the US.

Iron ore prices have taken a hit over the last few months as tariff turmoil has hurt macroeconomic sentiment at a time when demand for the product in China has been slowing. The market is also bracing for a looming oversupply problem, with analysts predicting prices could drop as low as $80 a ton toward the end of the year.

Elsewhere, the US and China agreed to send trade delegations to Switzerland later this week in a bid to de-escalate the tariff fight that has threatened to batter both economies.

Futures in Singapore rose 1.2% to $98.60 a ton at 9:26 a.m. local time, while yuan-priced futures on the Dalian exchange were also up. Steel contracts in Shanghai also rose.

Copper largely held three-day gains at $9,533 a ton, and most industrial metals were higher after China’s support measures. Aluminium gained 0.5% and zinc was 0.6% higher.