FX.co ★ Iron Ore Falls on Weak China PMI

Iron ore futures fell by nearly 1% to CNY 696 on Tuesday, nearing an eight-month low. This decline was driven by weak economic data from China, which cast a shadow over the demand for the metal. A private survey revealed an unexpected contraction in China’s manufacturing activity for May, marking its lowest point in more than two years. This data highlighted concerns about weakening industrial demand, especially in light of continuous pressure from US tariffs. Additionally, the sentiment was further dampened by reports suggesting that Chinese regulators might prohibit property developers from pre-selling homes. This potential ban could tighten liquidity for the already debt-heavy sector and potentially lead to widespread defaults, thereby decreasing steel demand from the construction industry—a significant component of global iron ore consumption. Simultaneously, the revival of US-China trade tensions also contributed to market apprehension. Beijing dismissed President Donald Trump’s accusation of violating a temporary trade agreement and promised retaliatory actions, which intensified the uncertainty in the market.