Iron ore futures on the Dalian and Singapore exchanges both fell on August 3 amid the crisis that is engulfing Chinese real estate companies.
According to Reuters, the price of iron ore for delivery in September on the Dalian Commodity Exchange fell 0.8% to 786.5 yuan (equivalent to 116.4 USD) / ton.
On the Singapore Exchange, the September iron ore contract fell 1.5% to $113 a tonne, the fourth consecutive drop.
Market sentiment became shaky after iron ore prices rose sharply last week but this week fell for several consecutive sessions. A survey report showed that China’s new home prices and sales in July were still in a downtrend.
China’s property market, already grappling with a debt crisis and weak demand, has recently been rocked by a wave of mortgage boycotts.
Analysts said that the market’s confidence is unlikely to recover quickly despite the government’s support for the real estate industry.
“The recovery has been very slow due to two key uncertainties: the wave of mortgage boycotts and the post-COVID-19 recovery,” said JPMorgan analysts.
The weakness of China’s real estate sector coupled with the government’s carbon emission reduction target means that steel production in 2022 may continue to decline. This is the main concern of iron ore traders. Although the profit margin of the steel industry recovered, it is still negative.
Accordingly, China’s domestic rebar profit margin has started to hit negative levels since June 13. The peak on July 5, negative profit margin to 40.57 USD/ton. However, currently, profit margin has improved but is still at negative 21.39 USD/ton.
According to SMM, a company specializing in providing information and data for the metal manufacturing industry, a total of 23 Chinese blast furnaces started production again between July 21 and August 1. Meanwhile, many other steel mills are expected to suspend operations in August because of losses or machinery maintenance.
A factory in Jiangsu, eastern China, said it continues to reduce output of rebar, coil and HRC due to low profits. Factory sources revealed that the factory may not increase production unless profit margins turn positive.
A factory in eastern China said it would try to maintain all finished steel production lines until August 6. The remaining two factories cut production due to unplanned plant maintenance. \
T&G Import-Export Joint Stock Company
Address: 352 Hue Street, Le Dai Hanh Ward, Hai Ba Trung District, Hanoi
Hotline: 02473010868
Email: hrm@tginterjsc.com
Website: http://tgimportexport.com
