Iron ore futures dropped on Tuesday as concerns over the indebted property sector in top consumer China countered optimism from the country’s recent efforts to contain a deepening crisis and shore up market confidence.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 1.76% lower at 979.5 yuan ($136.46) a metric ton, the lowest since Jan. 24.
The benchmark March iron ore on the Singapore Exchange was down 1.94% at $132.8 a ton, as of 0710 GMT, also the lowest since Jan. 24.
Denting sentiment, concerns resurfaced over China’s struggling property market after a Hong Kong court on Monday ordered the liquidation of property giant China Evergrande Group, the world’s most indebted developer.
Adding downward pressure is also the thinning liquidity in the spot market as most mills completed pre-holiday restocking, said analysts.
The retreat came after prices climbed to multi-week highs on Monday, helped by various measures to support the real estate market in the world’s second-largest economy.
China’s major southern city of Guangzhou fully relaxed home purchase limits for some people and would increase affordable housing supply, in a move to support the local property market.
Also, China’s central bank announced a deep cut to bank reserves last week, bolstering sentiment.
Iron ore production in Vale, the world’s second-largest supplier, grew 4.3% in 2023, topping the Brazilian miner’s estimate for the year, while shipments of the commodity dipped.
Other steelmaking ingredients on the DCE also receded, with coking coal DJMcv1 and coke down 2.21% and 2.54%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were weaker amid lower raw materials prices and diminishing demand.
Rebar shed 1.39%, hot-rolled coil also declined 1.39%, wire rod fell 1.13% and stainless steel lost 0.88%.
“Many construction sites have suspended operation and some steel traders have left the market with the Lunar New Year holiday approaching,” analysts at Everbright Futures said in a note.
Source: Hellenic Shipping News
