Iron ore prices continue to plummet as Chinese demand falls short of expectations, and inventories are rising. Steel materials have fallen nearly 25% from their peak in early January, reflecting the continued challenges facing China's real estate and manufacturing sectors.
After expecting a year-end rally, prices have completely reversed and are now nearing $110 per tonne, the lowest level since August.
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There are major iron ore producers such as, and the supply side is strong. veil S.A. (NYSE:VALE), rio tinto Co., Ltd. (OTCPK: RTNTF), BHP Group Co., Ltd. (NYSE:BHP), and Fortescue Co., Ltd.. (OTC: FSUMF) in 2023 he will achieve 1.12 billion tons. This will increase by 1.7% year-on-year in 2023. Most producers raised their production and shipment forecasts for this year, leading to further price pressure.
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of National People's Congress There was little hope for demand growth in Beijing. Construction activity, a key driver of steel demand, remains depressed due to China's prolonged crackdown on real estate debt. The lack of significant infrastructure stimulus will further impede a recovery in economic growth.
“Regarding real estate companies that have fallen into serious insolvency and have lost their management capacity, they should go bankrupt or be restructured in accordance with the law and market principles,'' he said. knee phoneAccording to a translation by CNBC, Minister of Housing and Urban-Rural Development.
“Those who commit acts that harm the interests of the public will be firmly investigated and punished according to the law,” he added.
Mr. Ni's words reflect China's long struggle with the real estate market.
Beijing began cracking down on developer debt as early as 2020. Regulators have set limits for debt-to-asset ratios of up to 70%, net gearing ratios of less than 100% and cash-to-short-term debt ratios of at least 1x. These rules forced deleveraging, which didn't work out well for companies that had relied on rising markets to continue selling debt to buy land development rights.
It now highlights a “new model for real estate development” aimed at increasing affordable housing, marking a shift in strategy, but with few details. This approach suggests that the real estate sector may continue to hinder overall growth and impact demand for industrial metals.
Additionally, ING Research highlights that iron ore inventories at major Chinese ports have increased, reaching the highest level since April 2023. Domestic demand growth may prove insufficient to absorb inventory despite iron ore imports increasing by 8.1% in the first two months of this year due to oversupply is maintained at a high standard.
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