Iron Ore Price Falls as China Data Shows Steel, Property Sector Woes

Iron ore futures fell on Monday, weighed down by disappointing economic data from top consumer China, raising concerns about demand prospects amid high portside inventories and weak steel output.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE), DCIOcv1, ended daytime trade 1.13% lower at 831 yuan ($114.54) a ton. Meanwhile, the benchmark July iron ore, SZZFN4, on the Singapore Exchange (SGX) was down 1.7% at $105.5 a ton, as of 07:02 GMT.

Data on Monday showed property investment in China fell 10.1% in the first five months of 2024 from a year earlier, following a 9.8% drop in January-April. Furthermore, new home prices dropped at the fastest pace in more than 9-1/2 years in May, suggesting the property sector remains a key drag on the economy despite government efforts to rein in oversupply and support debt-laden developers.

China’s crude steel output in May rose 2.7% from the previous year to 92.86 million tons, statistics bureau data showed. However, daily output was lower than in April.

"The current trading logic still revolves around expectations of crude steel output cuts," analysts at Huatai Futures said in a note. "Portside iron ore inventories continued to pile up, putting prices under pressure."

Other steelmaking ingredients on the DCE also recorded losses, with coking coal DJMcv1 and coke DCJcv1 down 0.96% and 1.5%, respectively.

Benchmark steel prices on the Shanghai Futures Exchange were weaker. Rebar SRBcv1 shed 0.74%, hot-rolled coil SHHCcv1 dipped 0.6%, wire rod SWRcv1 fell 0.81% and stainless steel SHSScv1 lost 0.21%.