COM - Iron ore tumbles after Goldman warns on China's weak real estate sector
2023-06-12 07:54:33 ET
Iron ore futures fell nearly 5% Monday in their first decline after eight straight winning sessions as Goldman Sachs warned China's weak property sector could be a multiyear drag on the country's economic growth.
The bank said it sees persistent problems in Chinese real estate with no quick fix, and the property recovery likely would be "L-shaped."
Iron ore futures jumped 14% over the previous eight trading days on hopes for policy that would aim to improve the property market, but the Goldman analysts said they do not foresee more housing-specific stimulus and suggested the government may seek to reduce economic and fiscal reliance on the sector.
According to Reuters, the most-active July iron ore contract ( SCO:COM ) on the Singapore Exchange recently was -4.8% at $107.20/metric ton, and most-traded September iron ore on China's Dalian Commodity Exchange ended daytime trading -1.8% at 785.50 yuan/ton ($109.96).
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Traders are waiting for the release this week of Chinese economic data for May, including industrial production, retail sales, bank lending and house prices, and for a decision from the People's Bank of China on medium-term lending.
Goldman's warning comes after Citigroup last week cut its iron ore price forecast to $100/ton for Q3 and $90/ton for Q4.
More on iron ore:
- Iron ore rally continues but analysts foresee lower prices on weak demand
- Iron ore slump showing Chinese economy is still struggling
- The bear case for iron ore
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Iron ore tumbles after Goldman warns on China's weak real estate sector