Iron ore price falls as Chinese economy slows
According to Fastmarkets MB, benchmark 62% Fe fines imported into North China were changing hands for $125.65 a tonne during morning trading, down 2% from Friday’s close.
May’s most traded iron ore contract on China’s Dalian Commodity Exchange ended the day down 2.4% at 705 yuan ($111.12) a tonne, near a session low of 700 yuan, its lowest since Jan. 10.
China’s central bank cut borrowing costs on its medium-term loans for the first time since April 2020, suggesting an intensification of the economic slowdown, even as the world’s second-largest economy recorded faster-than-expected annual growth of 4 % during the last quarter of 2021.
“The lagged economic data and the PBOC rate cut were already priced in, in our view,” said Atilla Widnell, managing director of Navigate Commodities in Singapore.
“Consumption remains the weakest link in China’s growth story right now and that will continue overall for much of this year,” said Louis Kuijs, head of Asian economics. at Oxford Economics. “We think Beijing has a net profit of around 5%. As is the case now, if growth is weaker than this, they will feel a strong incentive to pursue further policy easing.
The better-than-expected economic expansion, however, was China’s slowest pace of growth in a year and a half, and some analysts said the weakness is likely to persist in part due to ongoing covid-related restrictions. 19.
Iron ore was expected to correct following recent rallies, Widnell said, adding that improving weather conditions at the main Brazilian supplier and increased shipments from Australia could release some air. “overinflated” prices.
(With files from Reuters and Bloomberg)