Iron Ore Prices Decline Amidst Concerns Over China’s Property Market
Iron ore prices fell on Monday due to disappointing property data from China, with the May contract dropping by 1.27% on the Dalian Commodity Exchange. New home prices decreased in February, contributing to concerns over reduced steel demand. Steel production also declined by 1.5% year-on-year in early 2025, as steelmakers exercise caution amid trade tensions.
On Monday, iron ore futures experienced a decline, primarily due to disappointing property data from China, the world’s largest consumer. The May iron ore contract on the Dalian Commodity Exchange fell by 1.27% to 777.5 yuan ($107.39) per metric ton, while the benchmark April iron ore on the Singapore Exchange decreased by 1.76% to $102.15 per ton as of 0322 GMT.
New home prices in China dropped in February despite government efforts to stimulate the market. Additionally, new construction starts, a crucial indicator for steel demand, saw a decrease of 29.6% after a previous decline of 23.0% in 2024. The uncertainty surrounding the potential increase in hot metal output, an essential indicator of iron ore demand, has further contributed to the price decline.
Analysts at Jinrui Futures predict a mild increase in hot metal production this month, resulting in a potential accumulation of portside inventories in the upcoming weeks. Interestingly, despite relatively attractive profits, Chinese steelmakers are exhibiting restraint in production this year, as indicated by industry sources.
Steel production in China saw a 1.5% year-on-year reduction during the first two months of 2025, according to official data released on Monday. Additionally, prices for other steelmaking components, including coking coal and coke, have also fallen, with declines of 2.03% and 1.56%, respectively. Most steel benchmarks on the Shanghai Futures Exchange reported losses, with rebar down by 1.14% and hot-rolled coil losing 1.28%.
The recent drop in iron ore prices is primarily attributed to poor property data from China, highlighting the weakened demand outlook. The decline in new construction starts and new home prices raises concerns over future steel demand. Despite mild increases in hot metal production, the restraint shown by Chinese steelmakers underlines the impact of trade frictions on the market. The overall trend suggests ongoing challenges for iron ore and steel prices moving forward.
Original Source: energy.economictimes.indiatimes.com
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