Iron ore retreated on Thursday following gains earlier this week as weak Chinese trade data overshadowed the state lenders’ move to cut mortgage rates, seen as another measure to revive the country’s struggling property sector.
Negative margins suffered by Chinese steel mills stemming from the price rally of iron ore – from the lows in May – and other steelmaking ingredients, and the absence of a meaningful improvement in domestic steel demand also weighed on sentiment.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended morning trade 1.8 percent lower at 837 yuan ($114.31) per metric ton.
On the Singapore Exchange, the benchmark October iron ore contract was down 2.7 percent at $113.15 per ton.
China’s exports fell 8.8 percent in August year-on-year, while imports contracted 7.3 percent , customs data showed, piling pressure on the country’s vast manufacturing sector as demand sags at home and abroad.
Earlier in the day, major state lenders Industrial and Commercial Bank of China Ltd, Agricultural Bank of China and Bank of China separately said they will start lowering the interest rates on existing mortgages for first-home loans.
While China’s support measures for property developers should provide support to iron ore, with spot and futures prices hitting five-month highs this week, an immediate recovery for the sector is not expected, analysts said.
