Iron ore price sinks below $100 a tonne on grim China demand outlook
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $96.04 a tonne, down 4.24% and the lowest since November 2021.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange was down 10% at 645 yuan ($95.32) a tonne at the end of daytime trade, after earlier hitting 641.50 yuan, its lowest since December 15.
Mirroring weakness in iron ore demand, China’s crude steel output fell 3.3% in June compared with a year earlier and was down 6% from May.
Chinese steel producers are cutting back on output to help curb emissions and with margins squeezed by weak demand, clouding prospects for an immediate rebound in consumption of steelmaking ingredients.
“We believe the government needs to intervene decisively and swiftly in order to stabilize property and capital market sentiment,” JP Morgan analysts said in a note.
“Chinese steel and iron ore market are affected by an overshooting of central government measures. The covid restrictions are the most visible but the crackdown on property market speculation and the restriction on carbon emissions are the ones that are really affecting steel production and iron ore demand,” Jose Carlos Martins, Vale’s former Executive Director of Ferrous and Strategy and analyst at Neelix told MINING.COM.
“Covid restrictions affect final consumer and services the most. The other two are the most damaging to the core of the Chinese economy and the main contributors to GDP growth. Will China reach its growth target without liberalizing it?”
(With files from Reuters)
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