Iron-ore futures fell below $100/t for the first time in seven months as investors bet that China’s years-long property crisis will run through 2024, keeping a lid on steel demand.
The steelmaking ingredient has shed more than 30% since early January as hopes of a meaningful revival in construction activity faded. Loss-making steel mills are buying less ore, and stockpiles are piling up at Chinese ports.
The price rout deepened this week on more signs of demand weakness. Chinese steel mills are starting to announce production cuts as spot steel prices are falling. The poor performance this year is a reversal from 2023, when iron-ore outpaced base metals and other commodities to rack up a gain of 20%.
“The market sentiment is a bit extreme at the moment,” said Wei Xinyue, an analyst with Horizon Insights. “Chinese molten iron output is falling instead of rebounding. Steel demand has been significantly weaker than expected.”
The latest drop will embolden those who believe that the effects of President Xi Jinping’s property crackdown still have significant room to run, and that last year’s rally in iron ore may have been a false dawn.
While Beijing offered an ambitious goal of 5% growth at the recent National People’s Congress in Beijing, there were few new measures that would boost infrastructure or other construction-intensive sectors.
The steel-making ingredient fell as much as 3.8% to $98.70 in Singapore, its lowest since June, before trading at $99 as of 2:51 p.m. local time.