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(Bloomberg) \u2014 Iron ore dropped to the lowest level in 10 months as the steelmaking material faced a double whammy of limp Chinese construction activity and a renewed surge in supply.<\/p>\n
Futures in Singapore slumped through $100 a ton early Monday, tumbling almost 4%. China\u2019s years-long property crisis is still wreaking havoc on demand, while rising availability is compounding the pressure on prices. \u00a0<\/p>\n<\/div>\n
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\u201cThe move in iron ore this morning represents a return to basics and fundamentals,\u201d Atilla Widnell, managing director at Navigate Commodities Pte, said by email. A rebound in shipments of the raw material from Australia is likely to make port-side inventories in China even more bloated, he said.<\/p>\n
Iron ore has been closely tied to swings in the Chinese property industry over the past two decades. Singapore futures are now down about 30% this year, underscoring how President Xi Jinping\u2019s campaign to revamp the economy is hurting a key commodity used in construction.\u00a0<\/p>\n
Falling iron ore prices have ramifications well beyond China by hurting the most important revenue stream for global miners like BHP Group Ltd., Rio Tinto Group and Vale SA. Australia gets around a third of its total resource and energy export revenues from selling the mineral.\u00a0<\/p>\n
Bulging Inventories<\/p>\n
Disappointment over steel demand is coinciding with a period of relatively abundant supply, piling even more pressure on prices. Australia, the top shipper, saw a surge in exports in the week ending March 15 \u2014 the most recent for which data is available. Stockpiles held at China\u2019s ports are the largest in more than a year at about 142 million tons.<\/p>\n<\/div>\n
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\u201cBlast furnaces in China are being idled in response to weak margins and uncertainty around the direction of steel demand,\u201d Citigroup Inc. wrote in an emailed note. Resumption of economic activity since the Lunar New Year has been \u201clower than expected, impacting market sentiment,\u201d the bank said.\u00a0<\/p>\n
Iron ore in Singapore was trading at $97.50 a ton by 1:24 p.m. Dalian iron ore futures for September also fell Monday, adding to an 8.5% decline last week. Futures for steel rebar \u2014 basic metal rods used in construction \u2014 fell to the lowest in almost four years.<\/p>\n
There are few indications that a meaningful turnaround in China\u2019s property industry is on the cards. The value of new home sales from the 100 biggest real estate companies dropped about 46% in March from a year earlier.<\/p>\n
The China Iron & Steel Association last week warned that the property downturn and relatively weak infrastructure were delaying a recovery in steel demand. The steel industry\u2019s purchasing managers index for March sank to 44.2 \u2014 its lowest reading since May last year.<\/p>\n<\/div>\n
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Iron Ore Sinks to 10-Month Low on Gloom Over China Construction
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#Iron #Ore #Sinks #10Month #Gloom #China #Construction<\/p>\n","protected":false},"excerpt":{"rendered":"
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