SINGAPORE: Iron ore futures slipped on Friday, on track for a weekly loss, as property demand in China weakened.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 1.27% lower at 774.5 yuan ($107.83) a metric ton, as of 0328 GMT on Friday. The contract has lost 1.34% so far this week.
The benchmark September iron ore on the Singapore Exchange was 0.14% lower at $101.95 a ton. The contract has lost 0.2% so far this week. China’s crude steel output dipped to a seven-month low in July, down 4% from June and marking a second straight monthly decline.
The decline reflects ongoing efforts to curb overcapacity, while high temperatures and heavy rainfall restricted outdoor construction activity.
China’s new home prices fell 0.3% from the previous month in July, with demand remaining muted despite more local governments rolling out incentives for home buying.
At the same time, property investment declined 12% in the first seven months of the year from a year earlier. However, the year-on-year declines are narrowing across tier-one, tier-two, and tier-three cities. The central government has maintained calls to stabilise the market in recent months, signalling the potential for further policy support.
Meanwhile, a pullback in steel output in recent months has improved the profitability of the sector, pushing margins for steel mills into positive territory and giving iron ore prices room to push higher, ANZ analysts said.
Beijing’s renewed focus on reducing overcapacity could see this rally being sustained, providing further support to iron ore prices, ANZ said. Other steelmaking ingredients on the DCE fell, with coking coal and coke down 0.45% and 0.03%, respectively.
Steel benchmarks on the Shanghai Futures Exchange all lost ground. Rebar eased 0.81%, hot-rolled coil dipped 0.35%, wire rod fell 0.7% and stainless steel was down 0.69%.
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