Iron-ore set for weekly decline on China's weakening property demand
Iron-ore futures slipped on Friday, on track for a weekly loss, as property demand in China weakened.
The most-traded January iron-ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 traded 1.27% lower at 774.5 yuan ($107.83) a metric ton, as of 0328 GMT on Friday. The contract has lost 1.34% so far this week.
The benchmark September iron-ore SZZFU5 on the Singapore Exchange was 0.14% lower at $101.95 a ton. The contract has lost 0.2% so far this week.
China's crude steel output dipped to a seven-month low in July, down 4% from June and marking a second straight monthly decline. The decline reflects ongoing efforts to curb overcapacity, while high temperatures and heavy rainfall restricted outdoor construction activity.
China's new home prices fell 0.3% from the previous month in July, with demand remaining muted despite more local governments rolling out incentives for homebuying. At the same time, property investment declined 12% in the first seven months of the year from a year earlier.
However, the year-on-year declines are narrowing across tier-one, tier-two, and tier-three cities. The central government has maintained calls to stabilise the market in recent months, signalling the potential for further policy support.
Meanwhile, a pullback in steel output in recent months has improved the profitability of the sector, pushing margins for steel mills into positive territory and giving iron-ore prices room to push higher, ANZ analysts said.
Beijing's renewed focus on reducing overcapacity could see this rally being sustained, providing further support to iron-ore prices, ANZ said.
Other steelmaking ingredients on the DCE fell, with coking coal DJMcv1 and coke DCJcv1 down 0.45% and 0.03%, respectively.
Steel benchmarks on the Shanghai Futures Exchange all lost ground. Rebar SRBcv1 eased 0.81%, hot-rolled coil SHHCcv1 dipped 0.35%, wire rod SWRcv1 fell 0.7% and stainless steel SHSScv1 was down 0.69%.
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