(Bloomberg) -- Iron ore futures in Singapore touched $130 a ton for the first time since March on improving demand for steel in China, which is considering a new wave of stimulus to shore up the struggling property sector.
The steelmaking ingredient has jumped by a third from this year's low in late May. Iron ore surged past the $130 mark after Bloomberg reported Beijing plans to provide at least 1 trillion yuan ($137 billion) of low-cost financing to the nation's urban village renovation and affordable housing programs.
The plan would mark a major step-up in authorities' efforts to put a floor under the biggest property downturn in decades, which has weighed on economic growth and consumer confidence. It comes after last month's move to issue an additional 1 trillion yuan of sovereign bonds this quarter, with the funds partially earmarked for construction.
Expectations for iron ore restocking before February's Lunar New Year holiday period are also aiding the demand outlook. That's offset nervousness over the property sector, which accounted for as much 40% of Chinese demand for the bulk commodity before the real estate downturn.
Beijing has been making efforts to restore confidence in the troubled industry, attempting to save a major developer after letting two others plunge into default. China's economy, meanwhile, moved back into deflation in October.
Investors are also keeping an eye on possible interventions by Beijing to curb iron ore prices or reduce steel production. China Mineral Resources Group, the state-backed firm set up to consolidate the country's iron ore purchases, said last week that prices had reached unreasonable levels.
Iron ore traded 2% higher at $130.75 a ton in Singapore by 8:10 a.m. local time. Futures in Dalian and steel prices in Shanghai also surged at least 2%.
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