KEY POINTS
- Iron ore prices fell 2.8% to a three-week low.
- China’s expanded housing program aims to resolve the real estate crisis.
- Analysts say steel demand may not recover in the short term.
Iron ore prices tumbled to a three-week low as investors expressed doubts over China’s latest efforts to stabilize the property market and whether they will effectively boost construction and steel demand.
China boosts housing program, but steel demand remains weak
China will expand its program to support the completion of unfinished housing projects, allocating 4 trillion yuan ($562 billion), Housing Minister Ni Hong said during a briefing Thursday. The nearly doubled spending comes as Beijing attempts to ease the country’s ongoing real estate crisis, which has led to economic uncertainty and dampened demand for construction materials like steel.
Despite the announcement, iron ore futures in Singapore dropped as much as 2.8%, falling to $101.85 a ton — the lowest level since Sept. 27. In Shanghai, steel rebar prices also sank as much as 2.7%, reflecting the broader market’s concerns.
“The property policies are focusing on resolving the backlog of housing inventory, which doesn’t help steel demand in the short term,” said Zhou Mingbo, an analyst with GF Futures Co. “The market is unlikely to see immediate recovery in demand from these measures.”
Iron ore prices hit three-week low as investors react
Iron ore had rallied from a two-year low below $90 in late September to above $110 earlier this month. However, prices have faded following a series of government briefings on economic policy that fell short of expectations. According to a report by Bloomberg, China’s economy is under significant pressure, with third-quarter growth expected to be the weakest in six quarters.
“Investors are putting too much weight on government stimulus announcements,” said Han Jing, an analyst with SDIC Essence Futures Co. “While there has been a clear policy shift, the scale and pace of implementation will become more apparent over time.”
By late morning in Singapore, iron ore futures were trading at $102.65. On the London Metal Exchange, copper remained largely unchanged, while aluminum and zinc saw slight declines.
