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)