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Business|Construction|Iron Ore|Projects|Steel
business|construction|iron-ore|projects|steel

Iron-ore sinks as hopes for more China home-rescue plans dashed

29th July 2022

By: Bloomberg

  

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Iron-ore’s scorching five-day rally came to halt, with traders disappointed by a lack of fresh signals from Beijing that it will channel more funds toward China’s beleaguered property market.

The steelmaking material sank as much as 5% after surging more than 20% from its close on July 21. Investors had been optimistic more aid was on its way to revive construction projects stalled by a wave of repayment boycotts from homebuyers, but none was forthcoming during a key Politburo meeting.

Unlike during the April meeting where leaders spoke about “supporting local governments to improve real-estate policies,” Thursday’s meeting spoke of a broader directive to “stabilize the property market,” without specifically mentioning more supportive measures. Party leaders also delivered a generally downbeat assessment of economic growth prospects.

China is now facing what Bloomberg economist David Qu described as a moral hazard in being pressured to bail out developers after years of excessive business risks taken by the nation’s largest firms.

“There’s no clear message that the central government will coordinate any property sector rescue, which is a bit disappointing,” Australia & New Zealand Banking Group analysts including senior economist Betty Wang said in a note.

Singapore futures were 4.9% lower to $112.90/t at 10:40 a.m. local time. Dalian iron-ore futures logged a 2.6% decline, while in Shanghai, steel contracts nudged lower.

Edited by Bloomberg

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