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Iron ore prices fall on mounting fears over Chinese property-debt crisis

09:21, 10 November 2021

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construction worker on construction site with clouds and sunrise behind
Will the Chinese property debt crisis and its impacts on the construction industry affect the price of metals such as iron ore? – Photo: Shutterstock

Iron ore prices have dropped further on heightening risks of slowing steel demand from China’s property sector following the debt crisis faced by the country’s previous top-selling property-development firm, Evergrande.

Iron ore futures at the Singapore Exchange plunged 3.30% to $87.85/tonne on Wednesday. Spot iron ore traded at $91.98/tonne on Tuesday, down from $94.36 on the previous day. Iron ore prices have come off from record high of above $200/tonne in May.

“Increasing risks of weaker demand from the Chinese property sector saw iron ore futures push lower,” analysts at ANZ Research said in a note.

Debt crisis

Chinese property developer Evergrande Group is facing a deadline to make a $148m coupon payment on its overseas bond debt on Wednesday, Reuters reported. The company missed the initial deadline last month. 

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Evergrande’s debt woes have increased concerns about the liquidity crisis in the Chinese property sector. Last week, another developer – Kaisa Group – said its unit missed a payment on a wealth-management product.

Fitch Solutions said in a note on 8 November that iron ore demand would be further hampered if Evergrande’s difficulties spark contagion for other Chinese property developers that may not be directly exposed.

The research companies forecast iron ore prices will fall to $110/tonne in 2022 from the estimated average of $155/tonne in 2021 due to slowing growth of China’s demand.

Read more: Iron ore prices slide as China’s steel output cools

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