The iron ore market faces a tumultuous period as prices plunged with the steelmaking material dipping below the critical $110 per ton over subdued demand in China.
The downturn fueled by disappointing economic indicators has rattled investors and industry observers alike.
China, the world’s largest consumer of iron ore, grapples with sluggish real estate and manufacturing sectors, both significant drivers of steel demand.
As the annual National People’s Congress concludes in Beijing, optimism for a demand resurgence remains subdued, with no clear signals emerging from the government’s policies.
Iron ore futures in Singapore nosedived by 4.4% to $110.15 per ton, marking the lowest close since August.
Similarly, futures in Dalian plummeted by 4%, mirroring the somber sentiment prevailing in the market.
Analysts from Jinrui Futures Co. suggest that further price declines are imminent, anticipating that inventory withdrawals hinge on more substantial price adjustments.
Construction activity, a linchpin of steel demand, remains lackluster amidst China’s prolonged crackdown on property debt.
The absence of large-scale infrastructure stimulus exacerbates the situation, diminishing hopes for a swift economic recovery post-Lunar New Year.
Beijing’s reiterated stance on housing as a residential necessity, not a speculative asset, further dampens market sentiment.
Despite the absence of explicit stimuli, base metals exhibited mixed performances on the London Metal Exchange, underlining the sector’s vulnerability to China’s economic dynamics.
As China’s demand woes persist, the iron ore market braces for continued volatility, with implications reverberating across global commodity markets and industrial sectors.