Iron Ore Prices Dip as Chinas Property Support Falls Short of Expectations

Highlights:

• China's Property Support Expanded: China announced a 4 trillion yuan ($820 billion) program to support unfinished housing projects, nearly doubling the previous scale.
• Iron Ore Prices Hit Three-Week Low: Iron ore futures fell by as much as 2.8%, reaching $US101.85 per ton, as doubts linger over the impact of China's property stimulus on steel demand.
• Key Mining Stocks Decline: At the time of writing, major mining companies like BHP Group Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO), and Fortescue Metals Group Limited (ASX: FMG) saw share prices drop by up to 2.3%.

Iron ore prices hit a three-week low, reflecting skepticism among investors about whether China’s latest measures to bolster the property sector will effectively boost construction and steel demand.

China’s Real Estate Support Efforts

China’s Housing Minister, Ni Hong, announced plans to expand the program supporting unfinished housing projects to 4 trillion yuan (approximately $820 billion). This nearly doubles the previous scale of the initiative as Beijing seeks to address the ongoing real estate crisis. Despite these efforts, concerns remain over their short-term impact on steel demand.

Iron Ore and Steel Futures Drop

At the time of writing, iron ore futures dropped by as much as 2.8%, reaching $US101.85 per ton in Singapore, the lowest level since late September. Similarly, steel rebar in Shanghai declined by 2.7%. Analysts, like Zhou Mingbo from GF Futures, suggest that while policies aim to resolve housing inventory backlogs, they may not significantly impact steel demand in the immediate term.

Market Outlook

Iron ore prices had rallied from a two-year low of below $US90 in late September to over $US110. However, they have since receded as recent government briefings failed to meet market expectations. Analysts, including Han Jing from SDIC Essence Futures Co., note that while there has been a shift in policy direction, the scale and pace of its impact will unfold gradually.

At the time of writing, BHP Group Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) were both trading 1.5% lower, while Fortescue Metals Group Limited (ASX: FMG) had dropped by 2.3%. Copper on the London Metal Exchange remained relatively unchanged, while aluminum and zinc saw slight declines.

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