(Sept 24): Iron ore and copper, two of the most important commodities, rallied strongly after China unveiled a series of measures to boost growth and resurrect its beleaguered property market.

China, the biggest consumer of metals and the main driver of the fortunes of those who produce them, has been a constant source of bad news for commodity markets this year. A broad economic slowdown, combined with the crisis in the property sector, has seen metal prices slump and piled pressure on everything from steelmakers to copper smelters.

On Tuesday, Beijing responded, announcing a series of measures to address the nation’s economic malaise, and in particular targeting the real estate market.

Central bank governor Pan Gongsheng said policymakers would help banks boost lending to consumers, cut the key short-term interest rate and lower mortgage rates.

The growth-supporting salvo came the same month that the US Federal Reserve began an easing cycle with a half-point cut to interest rates and signalled further reductions at remaining meetings this year, while the European Central Bank lowered rates for the second time in 2024.

Iron ore, the key steelmaking ingredient with fortunes closely tied to China’s real estate market, spiked as much as 6.7%, heading for the biggest one day move in more than 16 months. Copper, aluminium and zinc all rose in London, while mining stocks also rallied strongly.

Iron ore has been among the worst performing commodities this year as China’s slowdown has hurt demand, with mills reducing steel output. At the same time, major low-cost miners in Australia and Brazil have been boosting supplies, driving the market into a surplus.

While investors relished China’s intervention, some analysts remained skeptical about how meaningful the impact would be ultimately.

“All in all, the measures announced cannot be expected to end the housing crisis by themselves or lead to a resumption of infrastructure spending,” said Volkmar Baur, an analyst at Commerzbank AG. “For that to happen, the measures would have to be accompanied by fiscal stimulus, which has not been announced.”

Iron ore future were traded 6.4% higher at US$95.15 (RM399.93) a tonne in Singapore. Still, even after the day’s gain, the commodity remains about a third lower this year. In China, yuan-priced steel futures climbed in Shanghai.

“Today’s policy is helpful in boosting market sentiment,” said Wei Ying, an analyst at China Industrial Futures Ltd. “However, the domestic economy issue is very complicated, so monetary loosening might not be enough,” Wei added, citing the need to watch for additional fiscal policies.

Base metals advanced as investors absorbed the content of the stimulus announcement. Copper gained as much as 2.2% on the London Metal Exchange. Zinc and aluminium both rose more than 2%.

Among miners, Anglo American plc gained about 7%, while BHP Group, Rio Tinto Group and Glencore plc all gained more than 4% intraday.

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