Iron ore price tumbles toward $90 on weak Chinese steel outlook
Iron ore prices fell to their lowest point in over a year on Wednesday, reflecting growing concerns about China’s troubled steel industry.
In Singapore, futures declined by 1.7% to $92 a ton at 4:30 p.m. local time, marking a fourth consecutive day of losses. Meanwhile, the most actively traded January iron ore contract on the Dalian Commodity Exchange in China dropped 3.09% to 689.5 yuan ($96.95) per metric ton, reaching its weakest level since August 22, 2023.
“Iron ore supply will most likely continue to rise no matter what,” said Chen Guanyin, an analyst at Mysteel Global.
“So, whether iron ore drops further will largely depend on whether demand for steel products sees a substantial rebound from the seasonal lull.”
This latest downturn comes after a brief rebound above $100 a ton last week. The decline is partly driven by a slowdown in China’s services sector activity in August, even during the peak summer travel season, according to a private-sector survey released Wednesday.
“Last week’s blindly optimistic and irrational sentiment rally is now being rationally unwound, as the market once again comes to terms with the realization of terrible downstream steel demand-side fundamentals in China”, said Atilla Widnell, managing director at Navigate Commodities.
“Despite numerous policies aimed at stemming the downturn in house prices and corresponding losses in wealth, it looks like the market has made its peace that these measures will not directly or immediately contribute to healthier construction activity and associated steel consumption,”
The data comes on the back of slowing growth in China’s new home prices, as its crisis-hit property sector struggles to find its bottom.
Immediate challenges facing China’s steel sector also include the domestic business environment, a rise in protectionism globally and local policies, said ANZ analysts in a note.
The ongoing crisis in the steel industry has led China’s largest mills to warn that the sector must adapt to a new reality of declining demand.
“Demand for steel in China, the world’s biggest producer, appears set to slip,” Bloomberg Intelligence analysts Richard Bourke and Grant Sporre wrote in a note.
(With files from Reuters and Bloomberg)