Iron ore price slides after China data shock

The pullback came after data on lending, output and spending for July from the Chinese central bank showed that after a strong second quarter the world’s second largest economy slowed at the start of the third quarter.

Chinese banks’ extension of new credit slumped in July to the lowest level since the global financial crisis while conditions in the already struggling property sector were also bleaker than expected.

Residential property sales fell by 17.9% in July compared to 2013, while developers’ inventories of unsold properties rose further and are now 25% higher than a year ago.

China’s property sector which has enjoyed years of red-hot growth, is a key component of its economy and also accounts for 47% of all steel demand, three times that of infrastructure.

China is responsible for more than two-thirds of the world’s iron ore consumption and forges almost as much steel as the rest of the world combined.

The slump in the price of iron ore comes despite an unexpected jump in Chinese imports.

China’s iron ore imports jumped nearly 11% to 82.5 million tonnes, after weaker prices encouraged buyers to add to inventories.

It’s the third highest month on record and brings the total for 2014 to above 540 million tonnes, a more than 20% increase over last year.

China’s biggest steel mills lowered output 2.2% at the end of July after a record breaking June and inventories at the country’s major ports remain above 110 million tonnes, almost 50% more than a year ago.