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Highlights
- Iron ore futures retreat from monthly highs due to China’s economic concerns.
- Steel production in China declines as government plans to cut output.
- Global trade pressures rise with new tariffs on Chinese metal exports.
Iron ore futures saw a pullback after reaching their highest level this month, as concerns over China’s economic recovery deepened. The latest data pointed to an uneven start for the world’s second-largest economy, with new home prices continuing to decline. This signals persistent challenges in the real estate sector, which is a key driver of steel demand.
On Monday, iron ore futures were trading around $101 per tonne, marking a retreat from Friday’s high. The drop comes as China’s economic indicators reveal ongoing struggles despite short-term demand optimism. The latest figures show that new home prices fell at an accelerated pace in February, marking the first time in six months that the decline has worsened. This trend raises concerns about whether the real estate sector has yet to find a bottom, despite government efforts to stimulate growth.
At the same time, China’s steel industry is experiencing a downturn. Data indicates that steel production in the country was 1.5% lower at the start of this year compared to the same period last year. Authorities in Beijing have announced plans to curb steel output in an attempt to manage overcapacity and improve industry profitability. However, further details on how these reductions will be implemented have not been disclosed.
China remains the dominant global producer of steel, with exports surging to near-record levels last year. However, rising global trade tensions are adding to market uncertainty. The United States has introduced tariffs on Chinese metals, and several other countries are taking measures to limit steel imports from China. This has put additional pressure on Chinese steel producers, which may impact their export strategies in the coming months.
The impact of these developments was evident in the futures market. In Singapore, iron ore futures dropped by 1.6% to $102.30 per tonne during the morning trading session. Meanwhile, futures on China’s Dalian Commodity Exchange also slipped by more than 1%. Contracts for hot-rolled coil and rebar followed a similar trend, reflecting broader weakness in the steel industry.
As China navigates economic uncertainty and global trade tensions persist, the outlook for iron ore and steel markets remains dynamic. Investors and industry participants are closely monitoring policy changes and demand trends to gauge the future direction of these critical commodities.
