by Enrico De la Cruz
(Reuters) – Iron ore prices were on their way to a fifth consecutive weekly decline on Friday as concerns over weak demand for raw materials in major steel producer China surpassed hopes of an easing in prices. restrictions on financing in the country’s real estate sector, shaken by debt.
The most traded iron ore for January delivery on the Dalian Commodities Exchange closed down 1.6% at RMB 546.50 ($85.48) a tonne and was on track for a weekly decline of nearly 3 %.
The December iron ore contract on the Singapore Stock Exchange was down more than 4% to $88.35 a ton in the early morning (Eastern time), down about 3% from last week .
Spot iron ore in China traded on Friday at an 18-month low, $90 a ton, down about 5% this week, according to data from consultancy SteelHome.
Traders were cautious after a rally in China’s ferrous futures markets on Thursday, fueled by the China Evergrande Group making last-minute payments to some bondholders and talks about a potential credit easing in the housing sector. The sector accounts for around a quarter of domestic steel demand.
“The question is more about the details of implementation,” JP Morgan analysts said in a note, referring to possible credit easing measures.
Still, China will stick to policies to curb over-lending by property developers, while making financing adjustments to help homebuyers and meet “reasonable” demand amid a liquidity crisis across the industry, say bankers and analysts.
Adding to the pessimistic outlook for China’s steel and iron ore demand, ArcelorMittal – the world’s largest steelmaker – said it forecasts a slight contraction in Chinese steel demand in 2021, citing the country’s real estate sector.
Construction steel rebar on the Shanghai Futures Exchange fell 2.3% after jumping 5% the previous session, while hot rolled coil fell 1%. Stainless steel fell 2.1%.
Metallurgical coal in Dalian fell 4.9%, while coke fell 2.9%.
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