FX.co ★ Iron Ore Tests 6-Month Low

Iron ore futures in China have decreased to CNY 705 per tonne, hovering close to a six-month low of CNY 690, which was reached on April 8th. This decline is attributed to recent data indicating that tariffs imposed by the US have already begun to affect factory and construction activities within China. The NBS Purchasing Managers' Index (PMI) for China plunged to a 16-month low in April, significantly underperforming forecasts as new export orders experienced the steepest drop since 2022. These developments have heightened concerns that weak consumer demand will continue to exert downward pressure on property prices, increasing the likelihood of developer bankruptcies and removing a critical demand source for global steel. Additionally, pessimism in the manufacturing sector has compounded bearish sentiments for iron ore, as factories previously relied on international markets to achieve their sales objectives. The Chinese government has remarked that overcapacity in steel mills could necessitate reductions in production by 2025, affecting demand for iron ore from steel furnaces. Nevertheless, China's crude steel output increased by 3.6% year-on-year to 93 million tons in March.