The price of Iron-Ore dropped due to Chinese Property-market slump
Iron Ore’s daily benchmark price fell to $79.5 a metric ton on Oct.31, marking the lowest point since November 2019. The price for Iron ore fell by 17% in October. The main reason behind this is the gloomy property market in China. China’s property market continued its slump in October, with private data showing home prices and sales falling, suggesting lackluster sentiment and a bleak outlook amid strict COVID curbs, which hit consumer confidence. Prices in 100 cities dropped for the fourth straight month in October, falling 0.01 percent month-on-month after a decline of 0.02 percent in September, according to a survey on Tuesday by China Index Academy, and property sales by floor area in 100 cities fell about 20 percent year-on-year in October. A major contributing factor is the strict covid policies that China implemented. Despite more than 230 stimulus policies introduced by 160 local governments in September and October during the 20th CPC national congress, including subsidies, easing purchase restrictions, and decreasing down payment requirements, it still failed to deliver concrete policies to stimulate the gloomy property market. Any rebound in the real estate market is expected to be delayed if the country sticks with strict COVID restrictions to quell the repeated coronavirus outbreaks. The relationship between Iron-Ore price and China’s property market is that the Chinese property market accounts for roughly a third of the global demand for iron ore that is shipped by sea. As fewer houses were built in China, the price of Iron-Ore keep falling. Iron ore’s downturn is likely to ease pressure on steelmakers by helping to lower raw-material costs, but it will hurt the profits of mining companies including BHP Group Ltd. and Rio Tinto PLC.
