Iron ore fell for a second day as optimism driven by the easing of strict virus curbs in China was offset by concern about the near-term outlook for the nation’s housing market, a key source of steel demand.
Futures in Singapore sank toward $108 a ton after losing almost 2% in the week’s opening session. While China is pivoting away from its Covid Zero policy, year-to-date new-home purchases in first-tier cities remain about 30% lower than a year earlier. Rekindling enthusiasm for property-buying could be an issue if home prices fail to pick up, according to Bloomberg Intelligence.
The steelmaking ingredient has rallied almost 40% since the start of November as the easing of virus restrictions boosted the outlook for demand. Still, signs of underlying weakness remain, with data Monday showing that China’s credit expanded at a slower-than-expected pace in November despite efforts by the central bank to boost lending and ease restrictions on property loans.
Iron ore’s fundamentals remain weak, with soft demand but relatively stable supply, according to Baocheng Futures. Prices will be under pressure as the market reflects these dynamics, it said in a note.
