Metals tumble as China fails to deliver fresh stimulus

(Bloomberg) — Iron ore fell from a five-month high and base metals fell as a long-awaited briefing from China’s top economic planner ended without new pledges to boost government spending .

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Officials at the National Development and Reform Commission offered little to investors expecting aggressive stimulus measures to add to a battery of policy moves launched in late September to boost a struggling economy.

Singapore iron ore futures fell as much as 4 percent after rising by a similar amount earlier in the session. The briefing came as China reopened after a week-long public holiday and investor disappointment was reflected in Chinese markets.

“There was talk that the NDRC might announce trillions of yuan in stimulus, but nothing came of it,” said Hang Jiang, head of trading at Yonggang Resources Co. in Shanghai.

Iron ore futures have risen by about a fifth since the end of September on optimism that Beijing’s earlier measures to stimulate the economy would end a period of deep sadness for China’s steel industry. Demand for the steelmaking ingredient has suffered amid a years-long housing crisis.

But investors are still looking for more concrete signs that the government’s commitments will feed into real economic activity. NDRC officials said they would accelerate spending, but their comments on investment and support for low-income groups were largely reiterated.

Not enough

Investors are “disappointed” after placing 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 was down 2.9 percent at $107.50 a tonne on the Singapore exchange as of 12:14 p.m. local time. Copper on the London Metal Exchange fell 1.3 percent to $9,797.50 a tonne to head for its lowest close since Sept. 24, while aluminum and zinc fell by also by more than 1%.

Base metals should receive continued support from China’s “material change in policy” last month, Citigroup Inc. wrote. in a note before the NDRC briefing. But other global risks — from the U.S. election to weak European growth and conflicts in the Middle East — would likely keep a lid on prices beyond the near term, they said.

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“The stimulus from China so far will not produce a significant change for base metals,” Yonggang’s Jiang said. “We need to see the incentives driving real consumption growth before we can see big price increases.”

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