Iron ore price rebounds on positive news from China’s property sector

The iron ore price rebounded on Friday following some positive news from China’s troubled property sector.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $91.69 a tonne, up 5%, after hitting the lowest in 18 months on Thursday.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange ended daytime trading 2.5% higher at 536 yuan ($84.00) a tonne. The contract hit 509.50 yuan earlier in the day, its lowest since Nov. 6, 2020, and marked its sixth consecutive weekly decline.

Debt-laden China Evergrande Group has resumed construction of 63 projects in the southern Pearl River delta, while Country Garden Services Holding raised HK$8 billion ($1 billion) in a share sale.

Concerns about the debt problems of Chinese property developers, a sector that accounts for about a quarter of the domestic steel demand, had recently added pressure on prices of iron ore and steel.

“There’s been a swarm of positive news from Chinese property developers. This is sentiment-driven, nothing has actually changed,” managing director at Navigate Commodities Atilla Widnell told Reuters.

China is also tapping the brakes on steelmaking in a bid to contain pollution and energy consumption.

“Despite ongoing steel production cuts, weak demand has resulted in a loose market balance, pulling down steel prices and margins,” said Richard Lu, a senior analyst at CRU in Beijing.

“In addition, iron ore inventories have built up to a multi-year high level.”

(With files from Reuters)