Dalian and Singapore iron ore futures fell on Monday, dragged by persistent concerns about China’s property sector crisis, and signs of weakening demand from Chinese steel mills.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended morning trade 3.2 percent lower at 828.50 yuan ($113.23) per metric ton.
On the Singapore Exchange, the steelmaking ingredient’s benchmark November contract was down 1.1 percent at $111.30 per ton.
More debt defaults are likely to emerge in China’s property sector, which accounts for a substantial portion of domestic steel demand, as developers struggle with a weak sales outlook while fundraising remains challenging, credit analysts said.
Country Garden bondholders are seeking urgent talks with the troubled property developer after it missed a $15 million coupon repayment, putting it at risk of default, according to three sources.
“The likely default raises concern that weak demand in China’s home market remains a headwind for steel and iron ore,” ANZ Research analysts said in a note.
Weak market fundamentals also weighed on iron ore prices, analysts said.
The blast furnace capacity utilization rate among the 247 Chinese steelmakers regularly surveyed by industry data and consultancy provider Mysteel dropped for a third consecutive week to 90.62 percent over Oct. 13-19.
Many steel mills in China, the world’s biggest steel producer, have halted blast furnaces to conduct maintenance in recent weeks, seeking some respite from the expanding losses amid weak steel sales, Mysteel reported.
Other steelmaking ingredients on the Dalian exchange also fell, with coking coal and coke down 2.7 percent and 2 percent , respectively.
Steel benchmarks on the Shanghai Futures Exchange also dipped. Rebar shed 1.6 percent , hot-rolled coil dropped 1.2 percent , and stainless steel lost 1 percent.
