Earlier in July, iron ore prices rose in response to the growing economic uncertainty around the world and the expectations of fresh policies from China’s Communist Party leadership in Beijing this week. To get clear signals from Chinese authorities about their future economic strategy, traders are keeping a close eye on the situation.
Earlier in June, iron ore prices went down. Experts attributed the decline to a sluggish demand for real estate in China. Bloomberg reports that despite China’s numerous attempts to revive the market, the efforts have not proven to be successful.
However, some analysts and traders think China, the world’s largest consumer of iron ore, will take encouraging steps to strengthen its flagging economy ahead of the upcoming meeting in Beijing. Analysts speculate that fiscal stimulus, a loosening of real estate market regulations, and more infrastructure spending are potential ways to boost domestic demand.
Top Chinese Communist Party leaders gathered this week in a crucial meeting to decide how to handle the country’s failing economy. The purpose of the meeting is to develop strategic policies to reignite economic activity and boost investor confidence against a backdrop of slowing growth and growing challenges.
CNN noted that in addition to the difficulties facing the real estate market, the meeting is taking place against the backdrop of internal Chinese issues with growing trade and technological disputes with the US and Europe.
The market is still erratic while traders wait for Beijing to provide clear policy signals. Trading decisions and short-term price movements will likely be impacted immediately and significantly by any announcements or changes in economic strategy from Chinese authorities.
As things stand right now, the iron ore market is on the verge of instability, and traders are prepared to respond quickly to any fresh information coming from Beijing. The direction of price movements and the general stability of the commodities market will be largely determined in the upcoming weeks.
