Iron ore dropped after data showed China’s crude steel output has plummeted as the nation’s property sector struggles under a prolonged downturn.
Futures of the steel-making ingredient fell as much as 1.6% after traders weighed a slew of key economic prints from the biggest metals-consuming nation on Tuesday. The data showed China’s growth exceeded expectations but other figures painted a picture of weak demand, while uncertainty lingers on whether the resilience of its export market can be maintained.
China’s steel output had its biggest drop in 10 months in June, falling 9.2% from the year before to 83.2 million tons. That left first-half production at its weakest since 2020.
Iron ore and steel futures rallied last week on speculation Beijing may do more to aid the struggling property sector. They were also boosted after the government vowed to tackle industrial overcapacity and excessive competition.
The troubles in the beleaguered housing market aren’t going away, with home pricing data falling in all cities surveyed. The deputy director of the National Bureau of Statistics said more efforts are needed to stabilize the industry.
China’s steel mills began to report preliminary half-year results this week and showed signs of improving margins, although they were still loss-making. Angang Steel Co. reported a loss of 1.14 billion yuan for the first half, while Maanshan Iron & Steel Co. also flagged a loss.
“The steel industry saw some improvement compared to the same period last year,” Angang said on Monday, citing a drop in raw material prices as a reason margins were boosted. “However, the market situation of supply exceeding demand has not fundamentally changed.”
Singapore iron ore futures were down 0.7% to settle at $98.92 a ton on Tuesday. Yuan-priced futures in Dalian and steel contracts in Shanghai also declined.
Base metals in China also came under pressure, with copper on the Shanghai Futures Exchange falling as much as 0.8%. The metal is facing headwinds as booming US import demand starts to fade and as China’s economy faces uncertainties.
On the London Metal Exchange, copper rose 0.3% to settle at $9,645.50 a ton at 5:51 p.m. local time. Other LME metals were mixed with nickel up 0.5% while zinc down 1.2%.
With assistance from Yvonne Yue Li.
This article was generated from an automated news agency feed without modifications to text.
