Iron ore surges as China’s $167 billion Tibet dam fuels demand hopes
&imwidth=600&imheight=450&format=webp&quality=medium "Iron ore surges as China’s $167 billion Tibet dam fuels demand hopes")
Workers are seen on the top of an iron ore pile as a machine works on blending the iron ore, at Dalian Port. Photograph: (Reuters)
Steel, copper rally as Beijing bets on mega infrastructure to revive economy.
On Monday, Iron ore prices surged to a four-month high. This reportedly comes after China unveiled a massive $167 billion hydropower project in Tibet, fuelling hopes of a demand revival in the construction and steel sectors.
The steel-making commodity jumped as much as 2.9 per cent in Singapore to nearly $104 per ton. Steel futures in Shanghai also rose sharply, while prices for copper, aluminium, and zinc gained on the London Metal Exchange. The rally came after Premier Li Qiang launched construction of the five-tier Yarlung Tsangpo dam, one of China’s most ambitious infrastructure projects to date, signalling renewed state-led investment in metals-heavy sectors.
China's mega dam project
The dam project, which is reportedly worth over 1.2 trillion yuan ($167 billion), is being built in Tibet’s Himalayan belt. It involves a cascade of five interconnected hydropower dams and is expected to deliver a major boost to China’s power grid and clean energy ambitions. But beyond energy, the project is poised to lift demand for steel, cement, glass, and other industrial materials, offering much-needed relief to sectors hit hard by China’s prolonged property slump.
The announcement signals a shift in Beijing’s growth strategy, with infrastructure spending once again being deployed as a counterweight to weak private investment and slowing exports.
Iron ore posts first monthly rise since January
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Iron ore prices have now climbed for four straight weeks and are set for their first monthly gain since January. The renewed optimism is also backed by policy signals: Chinese officials have pledged to rein in excess competition and overcapacity in the steel industry, improving sentiment around mill profitability and future demand.
The China Iron and Steel Association (CISA) said it held meetings with leading steelmakers and officials from the industry ministry last week. Companies reportedly vowed to address the problem of “involution” — a condition of intense competition that depresses margins and hinted at new regulatory tools to curb overcapacity, though details remain unclear.
Metals rally on stimulus optimism
By mid-morning trade on Monday, iron ore had risen 2.8 per cent to $103.60 per ton in Singapore. Rebar and hot-rolled coil contracts in Shanghai climbed more than 2 per cent, marking their strongest levels since March. On the London Metal Exchange, copper gained 0.5 per cent to $9,830 per ton, while zinc and aluminium also edged higher, reflecting broader optimism in the industrial metals complex.
Traders are now watching for follow-through demand from the dam project and possible additional infrastructure stimulus from Beijing. For now, China’s mega-dam announcement appears to have jolted confidence back into metals markets, offering a rare bright spot in an otherwise uncertain global economic backdrop.
(With inputs from the agencies)