THE price of iron ore fell back below US$100 a tonne to snuff out a rebound, as pessimisim over China’s economic prospects weighed on industrial commodities.
The steelmaking material rose almost 10 per cent during the past two weeks on tentative signs that the worst of China’s summer steel rout might be over.
However, soft manufacturing activity and downbeat news from China’s property sector stung prices on Monday (Sep 2).
A protracted real estate downturn has squeezed Chinese steel demand and triggered a wave of losses across the industry.
In Beijing last week, executives from 18 of the country’s biggest producers vowed more “self-discipline” to alleviate a glut of the metal.
Iron ore futures in Singapore fell 3 per cent to US$98 a tonne by 12.27 pm. Steel futures in Shanghai also declined.
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Factory activity in China contracted for a fourth straight month in August, while the latest property sales figures showed a worsening residential slump. One of the nation’s biggest developers posted its first loss in more than two decades.
It is “difficult to fundamentally improve the predicament of the iron and steel market” while supply is greater than demand, said Angang Steel. The listed arm of the country’s second-biggest steel producer posted an eighth straight quarterly losss in its recent earnings announcement.
The China Iron & Steel Association convened a summit held in Beijing last week to address growing pressures on the industry that still makes about one billion tonnes a year.
It said steelmakers needed to avoid “involution” – a phrase denoting destructive competition that has become popular in China in recent years.
The industry is used to operating under conditions of continuous growth, and ways to counter lower demand are still being worked out by companies, industry groups, and the government, the association said.
Few Chinese steelmakers have made a profit in 2024 as prices plunge, and there have been calls for action to stem an oversupply crisis.
Angang racked up a net loss of almost 1 billion yuan (S$183.9 million) in the second quarter, about 15 per cent less than a year earlier.
Base metals also joined broad declines across financial markets in Asia, with zinc – often tied to sentiment in China’s steel market – leading losses with a drop of 1.5 per cent. Copper fell 0.4 per cent, and aluminum declined for a fourth day. BLOOMBERG