Dalian and Singapore iron ore futures fell on Wednesday as a crisis engulfing property developers in China, the world’s top steel producer, outweighed improving margins at mills.
Iron ore’s most-traded September contract on China’s Dalian Commodity Exchange DCIOcv1 ended volatile daytime trade 0.8% lower at 786.50 yuan ($116.44) a tonne.
On the Singapore Exchange, the steelmaking ingredient’s front-month September contract was down 1.5% at $113 a tonne, as of 0700 GMT, extending losses to a fourth session.
Sentiment has turned shaky after iron ore’s solid gains last week. A private survey showed on Monday that China’s July new home prices and sales volume both fell from a month earlier.
China’s property market, which is already grappling with a debt crisis and weak demand, has been further rocked recently by a mortgage boycott.
Analysts said confidence is unlikely to be quickly restored despite government support for the industry.
“The recovery will be slow and gradual, with two major uncertainties ahead: the impact of recent mortgage boycotts on homebuyers’ confidence (and) revival of more lockdowns,” J.P.Morgan analysts said in a note.
China’s ailing property sector and its decarbonisation goal, which entails cutting annual steel production for a second straight year in 2022, remain key concerns for iron ore traders, though rebounding steel margins offer support.
A total of 23 blast furnaces in China resumed production between July 21 and Aug. 1, prompted by improved margins, according to metals information provider SMM, among dozens of such facilities idled for maintenance amid weak domestic steel demand.
Others are expected to follow suit in coming days, it said.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 was virtually flat, while hot-rolled coil and stainless steel both gained 0.1%.
Other steelmaking ingredients bucked iron ore’s volatility, with Dalian coking coal up 0.8% and coke DCJcv1 gaining 1.6%.