The Chinese iron and steel ore sector is trapped among the hopes that conditions will improve and the fact that most of the data is currently quite soft.
Data raft on Monday underlines this dynamics, with the National Statistics Bureau that reports the decline in property prices, investment, and sales of Chinese property.
January-February data shows that property and sales investment fell 9.8% and 5.1% year-to-year, while construction only began to plummet 29.6% after a decline of 23.0% in 2024.
The price of a new house fell 4.8% in February from the previous year, adding data that underlined that the main property sector so far failed to respond to Beijing’s stimulus efforts.
Weak data burdens the price of iron ore, with Futures in the Singapore Exchange (Szzfc1) down 1.1% to be closed at $ 102.65 per metric ton on Monday.
This is still up from the lowest this year $ 97.31 hit on January 6, but also fell almost 5% from the peak of $ 107.81 which was achieved on February 12.
China’s main domestic iron ore contract at the Dalian Commodity Exchange also subsided on Monday, ending at 781.50 Yuan ($ 108.09) per ton, down from 787.50 on March 14 and around 6.6% below the highest this year 839 Yuan from 21 February.
The Dalian contract has been traded in a narrow range since October, anchored at 800 yuan per ton, because the market is waiting for a clear signal about the state of the Chinese economy, producers more than half the world’s steel.
The problem is that every time the market begins to believe that Beijing’s efforts to increase growth in producing fruit, reality examination is conveyed in the form of soft data.
The number of weak properties comes at the same time when the government increases efforts to stimulate consumer demand, with Beijing announced on weekends that it aims to “with enthusiasm to increase consumption”.
While the announcement has no details, an enhanced area is the expansion of the Trade-in scheme, where consumers can increase equipment and vehicles that use government subsidies.
In this margin must be positive for steel demand because many equipment such as refrigerators and dishwasher machines are made of metal, like vehicles.
But durable cars and goods only contributed about 17% of the demand for Chinese steel, according to data from the BHP group of iron ore miners
BHP, while building construction accounts for 24% and further infrastructure is 17%.
This means that even if the manufacturing side of a good -performing steel equation, it will not be enough to stimulate demand unless construction also begins to increase.
Steel steel
Steel output in the first two months of 2025 was rather diverse, with official data showing production of 166.3 million tons of raw steel, down 1.5% from the January-February period in 2024.
Daily output around 2.82 million tons, which rose from 2.45 million in December and also above the average of 2.75 million for 2024 as a whole.
The question is whether steel output in the first two months should be higher than those given 6.7% of export surges to 16.7 million tons.
Steel makers increase delivery out as part of efforts to cash before the imposition of 25% tariffs on all steel and aluminum imports to the United States, one of the policies of President Donald Trump’s signature tariff.
The beginning of the US tariff on March 8 can cause lower imports, but the impact may not be as bad as being feared by steel exporters such as US steel makers are limited in how fast they can increase production, which means that steel consumers will be forced to continue to import and pay tariffs.
For now, the level of high uncertainty in the steel sector because it is waiting to see whether Beijing can trigger some growth momentum and also how Trump’s tariff will play for the next few months.
The view expressed here is from the author, columnist for Reuters.
Source: Reuters
