Iron Ore Sinks to 10-Month Low on Gloom Over China Construction

Iron ore dropped to the lowest level in 10 months as the steelmaking material faced a double whammy of limp Chinese construction activity and a renewed surge in supply.

Author of the article:

Bloomberg News

Published Apr 01, 2024 • 2 minute read

$lnl}d{snirl[hkruv29kq{rf_media_dl_1.png$ lnl}d{snirl[hkruv29kq{rf_media_dl_1.png SGX, Bloomberg

(Bloomberg) — Iron ore dropped to the lowest level in 10 months as the steelmaking material faced a double whammy of limp Chinese construction activity and a renewed surge in supply.

Futures in Singapore slumped through $100 a ton early Monday, tumbling almost 4%. China’s years-long property crisis is still wreaking havoc on demand, while rising availability is compounding the pressure on prices.

Advertisement 2

This advertisement has not loaded yet, but your article continues below.

THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY

Subscribe now to read the latest news in your city and across Canada.

Exclusive articles from Barbara Shecter, Joe O’Connor, Gabriel Friedman, Victoria Wells and others.Daily content from Financial Times, the world’s leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.

SUBSCRIBE TO UNLOCK MORE ARTICLES

Subscribe now to read the latest news in your city and across Canada.

Create an account or sign in to continue with your reading experience.

Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.

Sign In or Create an Account

Article content

“The move in iron ore this morning represents a return to basics and fundamentals,” Atilla Widnell, managing director at Navigate Commodities Pte, said by email. A rebound in shipments of the raw material from Australia is likely to make port-side inventories in China even more bloated, he said.

Iron ore has been closely tied to swings in the Chinese property industry over the past two decades. Singapore futures are now down about 30% this year, underscoring how President Xi Jinping’s campaign to revamp the economy is hurting a key commodity used in construction.

Falling iron ore prices have ramifications well beyond China by hurting the most important revenue stream for global miners like BHP Group Ltd., Rio Tinto Group and Vale SA. Australia gets around a third of its total resource and energy export revenues from selling the mineral.

Bulging Inventories

Disappointment over steel demand is coinciding with a period of relatively abundant supply, piling even more pressure on prices. Australia, the top shipper, saw a surge in exports in the week ending March 15 — the most recent for which data is available. Stockpiles held at China’s ports are the largest in more than a year at about 142 million tons.

Advertisement 3

This advertisement has not loaded yet, but your article continues below.

Article content

“Blast furnaces in China are being idled in response to weak margins and uncertainty around the direction of steel demand,” Citigroup Inc. wrote in an emailed note. Resumption of economic activity since the Lunar New Year has been “lower than expected, impacting market sentiment,” the bank said.

Iron ore in Singapore was trading at $97.50 a ton by 1:24 p.m. Dalian iron ore futures for September also fell Monday, adding to an 8.5% decline last week. Futures for steel rebar — basic metal rods used in construction — fell to the lowest in almost four years.

There are few indications that a meaningful turnaround in China’s property industry is on the cards. The value of new home sales from the 100 biggest real estate companies dropped about 46% in March from a year earlier.

The China Iron & Steel Association last week warned that the property downturn and relatively weak infrastructure were delaying a recovery in steel demand. The steel industry’s purchasing managers index for March sank to 44.2 — its lowest reading since May last year.

Article content

>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : Financial Post – https://financialpost.com/pmn/business-pmn/iron-ore-sinks-to-10-month-low-on-gloom-over-china-construction