MANILA: Iron ore futures hit three-week lows on Thursday amid fresh concerns about recovery prospects for China’s struggling property sector, with sentiment further dampened by flooding in the country’s top steelmaking province of Hebei. The most-traded September iron ore on China’s Dalian Commodity Exchange ended morning trading 2.1% lower at 818 yuan ($113.77) per metric ton, after hitting 816.50 yuan earlier in the session, its weakest since July 12.
On the Singapore Exchange, the steelmaking ingredient’s benchmark September contract slumped as much as 2.1% to $101.75 per ton, its lowest since July 10, and was on track for a third straight day of decline. “Iron ore markets slipped further given limited signs of fresh policy stimulus and ongoing weakness in residential property markets in China,” Westpac analysts said in a note.
Some city governments in China, the world’s biggest steel producer, have made it harder for developers to access tens of billions of dollars from property sales held in escrow accounts, Reuters reported on Wednesday, citing people familiar with the matter. The tightening raises risks that the cash-strapped companies will be squeezed even more, and appears to run contrary to Beijing’s assurance that it will help stabilise the sector.
Market sentiment was broadly negative, with steel benchmarks and other steelmaking ingredients in China also under pressure. Rebar on the Shanghai Futures Exchange fell 2.4%, hot-rolled coil shed 2%, wire rod lost 1.6%, and stainless steel dipped 0.9%.
Coking coal and coke on the Dalian exchange slid 3.2% and 4.4%, respectively. The flooding in Hebei from record rainfall added to market worries, particularly about the demand for steelmaking ingredients. Authorities in northern Hebei province have raised the natural disaster emergency response level, while China faced more stormy weather with Typhoon Khanun forecast to approach Zhejiang and Fujian provinces by Friday.
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