While iron ore started trading below $100 per ton for the first time since the beginning of December, it remains low due to weakness in China's commodity demand even during what is expected to be the busiest construction period.
Iron ore had soared since late last year on hopes that China's post-COVID-19 reopening and government incentives will boost demand. However, while the economic recovery has been uneven, activity in steel mills is causing short-term expectations to decline.
Construction accounts for one-third to half of the country's steel demand overall, while the government's ongoing effort to reduce the industry's debt remains a major headwind for the Chinese economy and industrial commodity appetite.
This level marks an 18 percent drop in April.
The statements made by the China Iron and Steel Association, a top producer, on Tuesday, warning of difficult market conditions for the remainder of this year, underlined the more pessimistic outlook.
"Recently, there has been a steady and rapid decline in steel prices in the domestic market, which has created serious difficulties for the operation and production of steel mills. Steelmaking facilities need to reduce loss-making production and keep cash," said a note on the association's website. .
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