Iron ore slumps on China property concerns, firmer supply

IRON ore futures declined to their lowest level in nearly two months on Friday (Nov 15) and fell for the week, weighed down by weakness in China’s property sector, stronger supply, and prospects of reduced seasonal steel demand.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 3.09 per cent lower at 736 yuan (S$136.6) a tonne, its lowest since Sep 27. It tumbled 6.18 per cent this week.

The benchmark December iron ore on the Singapore Exchange was 1.7 per cent lower at US$96.6 a tonne, as of 0850 GMT, falling 4.18 per cent for the week.

China’s new home prices in October fell the most year on year since 2015, while property investment declined 10.3 per cent in the first 10 months of 2024, official data showed on Friday, suggesting Beijing’s support measures for the sector have had little impact so far.

Additionally, an “aggressive” 2.17 million tonne increase in Australian iron ore shipments and 2.31 million tonne rise in Chinese iron ore arrivals in the week ending Nov 10 should undermine futures and prices, said Atilla Widnell, managing director at Navigate Commodities.

“At the same time, we anticipate Chinese blast furnace smelting activity will continue to ease through China’s winter months in response to heavily reduced construction steel demand,” Widnell said.

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Seasonal slowdown in construction activities amid colder weather throughout most of China is impacting steel demand, with work on job sites slowing or halting in northern regions, said Chinese consultancy Mysteel in a note.

Still, in some southern regions less affected by the climate, local contractors are speeding up construction to meet year-end deadlines, Mysteel said.

Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 1.29 per cent and 1.01 per cent, respectively.

Steel benchmarks on the Shanghai Futures Exchange also declined. Rebar dropped about 2.8 per cent, hot-rolled coil shed around 2.2 per cent, wire rod dipped 0.36 per cent and stainless steel declined nearly 0.5 per cent. REUTERS