Iron miners slide on China’s steel production declines and Evergrande problems By Investing.com
By Dhirendra Tripathi
Investing.com – ADRs and stocks of the world’s largest iron ore miners traded weaker on Friday amid fears of lower levies by Chinese steel producers.
Concerns about the debt problems of the real estate developer China Evergrande (OTC 🙂 The snowball melting to hurt the real estate and banking sectors of the world’s second-largest economy is also keeping sentiment for iron ore stocks moderate.
Rio Tinto (NYSE 🙂 and BHP (NYSE 🙂 ADRs traded down 2-3%. Vale ADR (NYSE 🙂 fell 1.3% as Anglo-American (LON 🙂 fell the most, 4.6%, in London.
In recent years, China has resorted to annual cuts in steel production at its factories to control emissions and reduce pollution. This exercise met with limited success while causing great price volatility. The country is the world’s largest consumer of metals as well as agricultural and non-agricultural products.
The country wants to keep its crude steel production in 2021 around the 1.05 billion tonnes of last year. UBS expects it to be around 1.07 billion tonnes in 2021-2022 and stable in 2022-2023. This is about 5% lower than its previous forecast of 1.13 billion tonnes.
The bank expects the iron ore market to be in surplus this half and sees iron ore prices averaging $ 89 / t in 2022. Iron ore prices have already more than declined down to half from this year’s high of around $ 106 / t.
To make matters worse for iron ore producers, ongoing developments at Evergrande (HK :), China’s second-largest real estate developer, are also of concern. Evergrande is set to default next week on some $ 300 billion in liabilities, and the poor performance of its own bonds is pulling others in the industry down, making it harder for other developers to raise. funds.
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