Iron ore slumped to a three-month low despite extra support for China’s housing market as investors fretted that steel demand wouldn’t stage a strong recovery after the Lunar New Year break.
Futures sank more than 5% in Singapore to hit the lowest intraday price since early November, following a drop in the week’s opening session. The weakness came even after Chinese banks cut a key reference rate for mortgages by a record amount, throwing more weight behind property-sector rescue efforts.
“The reality is that post-holiday demand is still not strong,” said Han Jing, a senior analyst at SDIC Essence Futures Co. “Molten-iron output remains lower than expectation, hence a price correction was expected.”
Iron ore is one of the wost-performing major commodities so far in 2024 as investors assess prospects for Chinese demand. The property crisis has been a major drag on the second-largest economy over the past couple of years despite a series of stimulus measures aimed at resolving the issue.
“Headwinds from China’s property sector — 30% to 35% of China’s steel demand and 20% to 25% of China’s total GDP, with related sectors included — will likely persist, albeit at a more moderated pace than last year,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
The iron ore market is expected to “broadly balanced” in 2024, BHP Group Ltd. said in a summary as it released earnings. Still, the world’s biggest miner cautioned there were “multiple uncertainties” around that outlook, including over how China’s regulators managed the local steel industry this year.
Iron ore traded 4.9% lower at $121.10 a ton at 4:21 p.m. in Singapore after hitting a low of $120.95 In China, iron ore in Dalian fell, with rebar and hot-rolled coil in Shanghai.
First Published: Feb 20, 2024 5:02 PM IST
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