Steel Clampdowns and Property Market Woes Wipe Out Iron Ore's Victory Streak!

Iron ore futures experienced a downturn on Friday, influenced by a struggling property sector and steel production limits, erasing previous short-lived upticks.

The most actively traded September iron ore on the Dalian Commodity Exchange in China concluded the daytime session with a minor decline of 0.1%, settling at 846.5 yuan ($118.09) per metric ton.

Meanwhile, on the Singapore Exchange, the standard August iron ore suffered a 0.9% decrease, standing at $113.8 per metric ton at 0710 GMT.

As per reports from industry expert Mysteel, most steel re-rollers located in the leading steel production hub of Tangshan initiated production curbs on Friday. This led to the operating rate among the inspected 35 re-rollers plunging to 12.77%, a significant drop from 46.81% on Wednesday.

Several steel plants in Tangshan were orally instructed to halt operations of one blast furnace until month-end, as shared by Mysteel.

In another Mysteel update, it was announced that seven blast furnaces in Tangshan, collectively capable of producing 26,000 metric tons daily, are set to undergo maintenance from July 21-31.

Iron ore prices are predicted to fall to around $100 per metric ton in Q4 2023, as China's steel demand slows in the latter half of the year, said the Commonwealth Bank of Australia in a forecast released on Friday. The forecast assumes minimal impact from any policy assistance measures declared in the approaching weeks.

"Primary concern lies in the state of China's real estate market, which shows evident signs of deterioration. We anticipate that it will take some time for home buyer confidence to regain stability."

However, the bank did revise its iron ore price projection for 2024 upwards, predicting that China's steel demand and real estate sector will regain balance by then.

Both Moody's and S&P Global issued grim warnings regarding China's largest commercial real estate company, Dalian Wanda Group, last Thursday. This has sparked worries of a potential high-profile default, the biggest since Evergrande's.

In contrast, steel benchmarks on the Shanghai Futures Exchange were on the rise. Rebar saw a 1.4% increase, hot-rolled coil boosted by 1.5%, wire rod ascended by 0.7%, and stainless steel leaped 1.3%.

Steel production components, Dalian coking coal, and coke registered minor decreases of 0.9% and 0.1%, respectively.

​Source: Reuters (Reporting by Carman Chew)