Iron-ore fell for the first time this week as a lull in China’s property sector persists, with fresh data showing a recent spurt in home sales in its capital losing momentum.
Prices of the key steel-making material had risen close to 20% over the past month in anticipation of China’s usual busy construction period in September and October. But less than two weeks after authorities eased mortgage restrictions, home sales in Beijing last weekend fell by more than a third compared to the weekend after the measures were announced, according to estimates by one of China’s top property agencies.
“The fate of iron-ore prices lies in the hands of China’s property sector,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note, pointing out that the sector accounts for 40-45% of steel demand in the country. Property developers need to build new apartments, he added, pointing out that new constructions have plunged by a quarter in the first seven months of the year from the same period last year.
If demand slows down during the current construction season, blast-furnace output won’t be maintained and will pressure iron-ore prices, Yongan Futures Co. said in a note.
Investors will be keeping an eye on new data on property prices for August, due to be released Friday, which will provide clues about the sector’s strength.
The steelmaking staple fell 1% to $117.90 a ton in Singapore at 11:45 a.m. local time. Iron-ore futures in Dalian slid 1.2%, while rebar and hot-rolled coil also declined in Shanghai.
Copper dipped 0.4% to $8,362.50 a ton on the London Metal Exchange, with other industrial metal prices were mixed before the release of US inflation data for August, which are expected to give a better guide on the future path of Federal Reserve interest rates.