Dragged lower by a decline in Chinese futures, spot iron ore prices continued to slide on Tuesday.
According to Metal Bulletin, the spot price for benchmark 62% fines fell by 0.25% to $56.63 a tonne, trimming its year to date advance to 30%.
The decline followed a drop of more than 1% in ore ore futures traded on the Dalian Commodities Exchange earlier in the day.
“Sentiment turned negative today following a decline in the on-shore futures markets and physical steel markets in China,” said analysts at the Steel Index.
Perhaps contributing to the souring in sentiment, there were further housing restrictions announced in China over the weekend, raising fears of a slowdown in construction, hence demand for steel and its raw components.
According to Reuters, China’s eastern city of Nanjing said on Sunday it would restrict home purchases, the latest second-tier city to do so as the government tries to rein in home prices.
“The real estate curbs will not encourage developers to build new houses and it will eventually affect demand for steel,” a Shanghai-based iron ore trader told Reuters.
According to data released by China’s National Bureau of Statistics earlier this month, new home prices rose by 9.2% in the year to August, another significant acceleration from the 7.9% pace seen in July.
Providing no clue as to whether the weakness in spot markets will continue, Chinese iron ore futures closed flat in overnight trade.
The most actively traded January 2017 contract in Dalian finished trade at 406 yuan, unchanged from the close of the prior session.
Trade in Dalian will resume at 11am AEST.