Dalian and Singapore
iron ore futures fell on Wednesday as a crisis engulfing property developers in
China, the world’s top steel producer, outweighed improving margins at mills.
Iron ore’s
most-traded September contract on China’s Dalian Commodity Exchange DCIOcv1
ended volatile daytime trade 0.8% lower at 786.50 yuan ($116.44) a tonne.
On the Singapore
Exchange, the steelmaking ingredient’s front-month September contract was down
1.5% at $113 a tonne, as of 0700 GMT, extending losses to a fourth session.
Sentiment has turned
shaky after iron ore’s solid gains last week. A private survey showed on Monday
that China’s July new home prices and sales volume both fell from a month
earlier.
China’s property
market, which is already grappling with a debt crisis and weak demand, has been
further rocked recently by a mortgage boycott.
Analysts said
confidence is unlikely to be quickly restored despite government support for
the industry.
“The recovery will
be slow and gradual, with two major uncertainties ahead: the impact of recent
mortgage boycotts on homebuyers’ confidence (and) revival of more lockdowns,”
J.P.Morgan analysts said in a note.
China’s ailing
property sector and its decarbonisation goal, which entails cutting annual
steel production for a second straight year in 2022, remain key concerns for
iron ore traders, though rebounding steel margins offer support.
A total of 23 blast
furnaces in China resumed production between July 21 and Aug. 1, prompted by
improved margins, according to metals information provider SMM, among dozens of
such facilities idled for maintenance amid weak domestic steel demand.
Others are expected
to follow suit in coming days, it said.
Construction steel
rebar on the Shanghai Futures Exchange SRBcv1 was virtually flat, while
hot-rolled coil and stainless steel both gained 0.1%.
Other steelmaking ingredients bucked iron ore’s volatility, with Dalian coking
coal up 0.8% and coke DCJcv1 gaining 1.6%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Shounak
Dasgupta and Shailesh Kuber)