Iron-ore hits lowest since November as demand concerns escalate
Iron-ore hit a three-month low as the upcoming Lunar New Year and ongoing property market crisis cast a shadow over Chinese demand.
Benchmark futures in Singapore dropped for the fifth time in six sessions, sinking below $124 a ton overnight to hit the lowest intraday level since early November. Hot-metal production in China is muted, with pre-holiday steel demand generally weak, according to Huatai Futures.
The nation’s property market — the largest driver of steel demand — continues to face liquidity woes. More than 1 000 projects in 25 cities are seeking 373-billion yuan ($52 billion) in funding, according to a tally by Bloomberg Intelligence, which said it showed “the grave need for finance".
Iron ore has suffered from a poor start to the new year, retreating by about 11% in one of the weakest performances among major commodities. The steel-making staple has been dragged lower by China’s as-yet-unfixed property woes, as well as signs of abundant supplies from Brazil.
Construction-led steel demand is expected to drop to lower levels given that the Central Committee of the Chinese Communist Party aims to reduce leverage in the property sector, according to DBX Commodities.
Iron ore traded 1.5% lower at $124.25 a ton at 11:50 a.m. in Singapore, after earlier losing as much as 1.9%. In steel markets, rebar futures and hot-rolled coil in Shanghai both touched the lowest intraday levels since November.
On the London Metal Exchange, prices were mixed. Nickel headed for its first close below $16 000 a ton in almost three years, while tin, copper, lead and zinc edged higher.
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