Iron ore futures on the Dalian and Singapore exchanges fell below $100 USD on Friday as fears grew of a waning demand for steel as China’s economy faltered in the second quarter. and a crisis in the local real estate sector appears to be getting worse.
The economy of China, the world’s largest producer of steel and consumer of iron ore, contracted 2.6% in the second quarter compared to the previous quarter, a worse-than-expected performance due to the lockdowns against Covid-19.
The most-traded iron ore for September on China’s Dalian Commodity Exchange tumbled 10% to 645 yuan ($95.32) a tonne late in Friday’s session, after hitting 641.50 yuan earlier, the lowest level since December 15th.
The contract is down 13.3% this week, the sharpest drop since mid-February.
On the Singapore Stock Exchange, the steel ingredient contract for August was down 4% to $96.25 a tonne, the weakest since November, putting it on track for a weekly loss of more than 11%.
Mirroring weakness in iron ore demand, China’s crude steel production dropped 3.3% in June compared with a year earlier. In relation to May, there was a retraction of 6%.
Chinese steelmakers are scaling back activity to help curb carbon emissions and on tight margins from weak demand, obscuring prospects for an immediate recovery in steel ingredient consumption.
Steelmakers are also struggling with bad weather, Covid-19 restrictions and an ongoing housing crisis.
Source: CNN Brasil
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