Dalian iron ore futures faced downward pressure on Monday due to concerns over repayment issues at two major developers in China, which further deepened the crisis in the property sector.
Country Garden and Dalian Wanda, China’s two largest developers, are currently struggling with cash shortages, leading to a loss of confidence in the industry.
The Chinese property sector, a significant consumer of steel, has been experiencing a prolonged slump since the default of Evergrande, a major real estate developer, nearly two years ago. The subsequent wave of failures in the industry has weighed heavily on construction and overall economic activity. Evergrande recently disclosed substantial losses of USD 81 bln over 2021 and 2022.
As a result of the government’s crackdown on debt and the erosion of public confidence, property development in China has come to a standstill. Builders are unable to sell apartments or refinance their debts, exacerbating the crisis in the sector.
Despite the Chinese authorities’ efforts to boost the economy through various measures, analysts remain skeptical about their effectiveness in stimulating growth. Furthermore, iron ore demand has been affected by production curbs and maintenance related to environmental concerns in Tangshan, as well as announcements from major steel mills.
Dalian iron ore futures for the September contract closed almost flat at 843 yuan (USD 117.2) per ton. On the other hand, coke and coking coal futures experienced drops of 0.79pct and 2.29pct, respectively, reaching 2,257 yuan (USD 314) per ton and 1,472.5 yuan (USD 205) per ton.
However, steel futures saw gains after the Chinese government pledged increased support for property construction by promoting the renovation of villages in mega cities. The government aims to enhance policy support for urban innovations and attract more private capital to expand domestic demand and advance city development, according to the local media reports.
In the Shanghai Futures Exchange, rebar futures saw a slight increase of 0.37pct, reaching 3,793 yuan (USD 528) per ton, while HRC futures rose by 0.51pct to 3,918 yuan (USD 545) per ton. Wire rod futures also increased by 1.84pct, settling at 4,151 yuan (USD 577) per ton. Additionally, stainless steel futures experienced a rise of 1.21pct, reaching 15,505 yuan (USD 2,157) per ton.
1 USD / 7.18 yuan
