Talking Points: Iron Ore, Global Economic Recovery, and US Infrastructure Deal As the global economy accelerates, demand for iron ore is driving prices upward. Metals will benefit from a pending US infrastructure pact. View each DailyFX Analyst’s favorite trades for the third quarter. From the DailyFX Free Trading Guides, download our new 3Q top trading chances guide! As a US infrastructure deal takes shape, iron ore will continue to lead the way. As the global economic recovery progresses, iron ore prices may rise more. However, the industrial metal has encountered a few setbacks on its upward journey. One of them is China’s recent initiatives, which include intentions to release state reserves in an attempt to slow down the rapid price rises observed in H1 2021. While China’s efforts have put some upward pressure on prices, the underlying demand factors throughout the globe are likely to prevail. The infrastructure package now being discussed in the United States could be a huge tailwind for iron ore. A bipartisan group of senators reached an agreement, boosting hopes for a near-$1 trillion measure. The progress on Capitol Hill is an encouraging development for industrial commodities, even if its ultimate fate remains unknown. Given recent progress, a law reaching President Biden’s desk in the third quarter is possible. A component focusing on electric vehicles, in addition to an emphasis on roads, bridges, and airports, may help the demand picture for metals. According to a White House fact sheet, the final deal will likely look different, but it will include $109.0 billion for highways, bridges, and major projects, $66 billion for rail, and $7.5 billion for electric car infrastructure. Furthermore, Democrats plan to introduce a second bill that would provide additional funds for green energy infrastructure. Iron ore prices are expected to rise further as work in the global reopening continues. Iron ore prices rise as the global economy improves. View each DailyFX Analyst’s favorite trades for the third quarter. From the DailyFX Free Trading Guides, download our new 3Q top trading chances guide! —- Thomas Westwater, a DailyFX.com analyst, wrote this article. Use the comments area below to reach Thomas, or follow him on Twitter at @FxWestwateron./n
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