2023-08-14 13:25:48
© Reuters. Vale’s iron ore mine in Carajás. REUTERS/Lunae Parracho//File Photo
Por Carman Chew
SINGAPORE (Reuters) – Futures fell on Monday, with the Singapore bourse holding just above the support level of $100 a tonne as expectations of steel output cuts in China and weakness in the country’s real estate segment weighed on sentiment.
The most traded iron ore for January on China’s Dalian Commodity Exchange fell 0.4% to RMB 725 ($99.88) a tonne.
On the Singapore Exchange, the benchmark iron ore in September fell 2.4% to $100.3 a tonne, eroding gains from the previous session. Earlier, the Singapore contract fell below the psychological threshold at $99.90.
Expectations of crude steel cuts in China hit sentiment.
“Industry discussions (with Citi) suggest that crude steel control targets are likely to be finalized by August 15th, and local governments and mills can make their own production control plans thereafter,” said the bank in note, reflecting concerns for the southwestern province of Yunnan.
“This supports steel margins but likely has negative implications for iron ore. However, the actual impact will still depend on how local governments apply the cuts amid the weak macroeconomic environment,” the analysts add.
Weak Chinese demand and a deteriorating property market also added to the pressure.
China’s new bank lending fell in July and other key credit indicators also weakened, despite policymakers cutting interest rates and pledging more support to the faltering economy.
Chinese real estate giant Country Garden’s debt problems deepened after its onshore bonds were suspended, sending its shares plunging 16% to a record low on Monday.
(Reporting by Carman Chew)
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