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The weekly iron ore price is set to fall due to China's falling property demand

The weekly iron ore price is set to fall due to China's falling property demand

The price of iron ore futures fell on Friday. They are on course to lose money for the week as China's property market weakened.

As of Friday, 0328 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange was trading 1.27% lower. It was trading at 774.5 Yuan ($107.83), per metric ton. This contract has fallen 1.34% this week.

On the Singapore Exchange, September benchmark iron ore was $101.95 per ton lower. The contract has fallen 0.2% this week.

China's crude output of steel fell to a low for seven months in July. This is a 4% drop from June, and marks a second consecutive monthly decline. The drop reflects efforts to reduce overcapacity while heavy rains and high temperatures restricted outdoor construction.

China's new homes prices dropped 0.3% in July compared to the previous month, despite local governments offering more incentives for homebuying. Property investment fell 12% from a previous year in the first 7 months of this year.

The declines in the number of people living in Tier-one, Tier-two and Tier-three cities are decreasing. In recent months, the central government has continued to call for the stabilisation of the market. This could be a sign that further policy support is on the way.

Analysts at ANZ said that a recent drop in steel production has helped to improve profitability in the steel industry, pushing the margins of steel mills up and allowing iron ore prices to rise.

ANZ stated that Beijing's renewed emphasis on reducing the overcapacity may see this rally continue, providing additional support for iron ore.

Coking coal and coke, which are used to make steel, also fell on the DCE. They were down by 0.45% and 0.03% respectively.

All steel benchmarks at the Shanghai Futures Exchange have lost ground. Rebar fell 0.81%, while hot-rolled coils dropped 0.35%. Wire rods also declined 0.7%, and stainless steel fell 0.69%. ($1 = 7,1824 Chinese yuan). (Reporting and editing by Sonia Cheema; Lucas Liew)

(source: Reuters)