Iron Ore Doldrums Viewed to be Derived from China’s Property Crisis

Iron ore futures have been under pressure lately, and may go even lower as worries about global demand – particularly, one from China – intensified amid slow inventory replenishment in the latter’s warehouses and looming steel production cuts.

As China Evergrande's problems illustrate, China's housing crisis continues with no sign of easing so far, and, hence, the prospect of weak steel demand has raised concerns about further production cuts in Q4 2023, which will lead to iron ore demand’s protracted decline.

The real estate market is naturally China's largest steel consumer market, and its continued weakness produces the most negative impact on the steel market. According to Reuters, the January iron ore contract (SCO:COM), the most traded January iron ore contract on China's Dalian Commodity Exchange, closed down 1.6% yesterday at 841 yuan ($115.04) per ton, after falling 2% the previous day. The benchmark price fell 2% in October. Also, iron ore prices fell -0.6% to $115.35/ton on the Singapore Exchange, posting their lowest level in two weeks.