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China's property sector is struggling, and iron ore prices are falling.

China's property sector is struggling, and iron ore prices are falling.

Iron ore futures prices fell in the early trading on Monday due to persistent weakness in China's top consumer, its property sector. Steel benchmarks and steelmaking components, however, posted gains.

As of 0215 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange was down 0.5% to 794.5 Yuan ($111.54).

The benchmark iron ore for September on the Singapore Exchange fell by 0.38% to $105.3 per ton.

China's new house prices dropped by 0.3% from the previous month in August. This continues a downward trend which began in May 2023, and highlights ongoing weakness on the housing market.

In China, however, the number of new bank loans rebounded after an unexpected decline in July. However, the recovery was less than expected as the government's efforts to reduce industrial overcapacity and the property slump continued to dampen demand for credit.

China's crude-steel output fell 0.7% on an annual basis, and output in the first eight month of this year was 2.8% lower than the same period last.

Analysts from ANZ said that iron ore futures still posted a third weekly gain in a row last week. This was due to renewed activity at steel mills in China following the end of environmental production restrictions relating to a military display.

According to Chinese consultancy Mysteel, the domestic demand for construction steel will recover in September due to better weather conditions and improved financial health in certain non-real estate industries.

Coking coal and coke, which are used to make steel, also increased in price, by 2.77% and a 3.07% respectively.

Broker Hexun Futures stated in a report that coke and steel firms are increasing the restocking coking coal as Chinese National Day approaches.

All steel benchmarks at the Shanghai Futures Exchange gained ground. Rebar increased by 0.26%. Hot-rolled coils rose by 0.21%. Wire rod gained 0.18%. Stainless steel grew 0.81%.

(source: Reuters)