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Iron ore, steel futures fall on China property woes

Dalian and Singapore iron ore futures fell on Friday after data showed China’s property sector contracted further in August, with a seasonal demand boost usually seen beginning September not yet in sight.

Property investment last month in the world’s top steel producer fell at the fastest pace since December 2021, according to Reuters calculations based on official data. New home prices fell 1.3% year-on-year, the fastest pace since August 2015.

The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 1.2% lower at 715 yuan ($101.89) a tonne.

On the Singapore Exchange, the steelmaking ingredient’s benchmark October iron ore SZZFV2 slumped 2.6% to $98.05 a tonne, as of 0739 GMT, trading below $100 for the first time this week.

Friday’s data sapped market confidence that had propped up China’s ferrous complex in recent days, underpinned by the government’s intensified support for the ailing property sector and hopes of additional policy action to shore up the economy.
Policymakers have announced over 50 economic support measures since late May and last week stressed that this quarter was a critical time for policy move.

“The anticipated ‘Golden September, Silver October’ is not yet seen,” J.P.Morgan analysts said in a note, referring to the seasonal pick-up in construction activity and property demand in China.

Analysts expect COVID-19 disruptions to business activity in China to keep investors cautious.

Traders largely shrugged off China’s faster-than-expected growth in factory output and retail sales in August.

Rebar on the Shanghai Futures Exchange SRBcv1 fell 1.6%, hot-rolled coil SHHCcv1 shed 1.3%, and stainless steel SHSScv1 dropped 1.9%.

China’s crude steel output rose 3% in August from a month earlier as steel mills eyed better demand and resumed operations.

However, other steelmaking inputs recovered from early losses, with Dalian coking coal DJMcv1 and coke DCJcv1 up 0.6% and 0.1%, respectively.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu Sahu

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