Iron ore slides as China’s housing issues worsen

Plans by the big miners to raise production will swell supply, putting prices under pressure. — Bloomberg

SHANGHAI: Iron ore is likely to revisit US$100 a tonne by the end of the year before falling further to US$85 in 2025 as China’s housing market collapse worsens, according to Capital Economics Ltd.

Falling steel production and emissions controls on highly polluting blast furnaces should shrink Chinese iron ore demand by 1% in 2024 and 2% in subsequent years, the London-based research firm said.

At the same time, plans by the big miners to raise production will swell supply, putting prices under pressure.

Demand growth elsewhere in the world is unlikely to soak up enough of the surplus given China’s near-70% share of the global market, Capital Economics said.

Iron ore has staged a mini-recovery this month after tumbling below US$100 a tonne due to disappointing demand in China.

Futures last traded at US$111.10 a tonne in Singapore, up 1.1% on the day, although that’s still more than 20% lower than the start of the year.

Rio Tinto Group disclosed a 5% drop in first-quarter shipments, citing an uneven economic recovery in China and weakness in its property sector.

The US is committed to safeguarding its investments in domestic clean energy manufacturing, even as China builds excess production capacity, White House climate adviser John Podesta said on Tuesday. —Bloomberg