Iron ore prices fell to their lowest level in 6 weeks, in light of investors’ concerns about the prospects for Chinese demand as the extended crisis in the real estate sector enters its third year.
Iron ore futures prices in Singapore fell by 3.3% to $111.70 per ton during today’s trading, recording the lowest level since the seventeenth of last April, before rebounding slightly to $111.90 per ton.
Futures contracts traded on the Chinese Dalian Stock Exchange also fell by 2.4% to 844 yuan ($116.48) per ton.
According to Bloomberg, sales of new homes by the 100 largest real estate companies in China fell by 34% on an annual basis to 322.4 billion yuan ($44.5 billion) in May, compared to a 45% decline in April.
Huai Shan, chief China economist at Goldman Sachs, explained in a statement to the agency that home construction starts and new construction projects will remain weak due to the trend towards a policy of reducing real estate inventory (purchasing stagnant homes by local governments).
He added that the bank’s real estate team expects home construction starts to decline by 15% this year, with iron ore prices likely to decline to the level of $100 per ton in the fourth quarter.
