Iron ore fell after fresh data spotlighted concerns around China’s struggling steel-intensive property sector, even as authorities step up pressure on cities to shore up real estate markets.
(Bloomberg) — Iron ore fell after fresh data spotlighted concerns around China’s struggling steel-intensive property sector, even as authorities step up pressure on cities to shore up real estate markets.
The steelmaking staple reversed the 1.3% gain posted earlier in the session after figures showed the value of new home sales by the 100 biggest developers plunged by a third in July from a year earlier, the most in 12 months. China’s State Council is now urging cities to deploy new property policies to ensure the health of the sector, although no specific measures have been announced.
The real estate industry accounts more than a third of steel consumption in the country, and demand has waned for more than a year. The sector has been a major part of China’s disappointing post-pandemic economic recovery that’s seen iron ore prices drop around a fifth from a February peak.
Traders are also assessing the impact of floods on mills and transport in Hebei, a northeastern province that’s home to major steel-hub Tangshan. Still, mills in the area appear to be operating at their usual run rates despite poor weather, according to Wei Ying, an analyst at China Industrial Futures Co.
Signs that China’s economic growth appears to be losing momentum have led some analysts to speculate Beijing will take stronger stimulus measures to support the economy.
“Policy support should drive a turnaround later this year” for the economy, Capital Economics Ltd. said in a note dated July 31. “But with officials taking a restrained approach to stimulus, any re-acceleration in growth is likely to be modest.”
Iron ore was down 0.6% to $106.70 a ton as of 11:18 a.m. in Singapore, after gaining 0.7% on Monday. Futures in Dalian were also 0.6% lower, while steel futures in Shhanghai made modest gains.
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