January’s top-selling iron ore on China’s Dalian Commodity Exchange ended the day down 2.5% at 835 yuan ($114.13) a metric ton, on track for a third straight session of losses.
On the Singapore Exchange, the benchmark November steel contract rose 0.3% to $112.85 after falling as much as 1.7% to its lowest since Oct. 11.
Credit analysts say more debt defaults are likely in China’s property sector, which accounts for much of domestic steel demand, as developers grapple with weak sales prospects and fundraising remains challenging, credit analysts say.
Country Garden bondholders are demanding urgent talks with the troubled developer after it missed a $15 million coupon payment, putting it at risk of default, according to three sources.
“The likely default raises concerns that weak Chinese domestic demand remains a drag on steel and iron ore,” analysts at ANZ Research said in a note.
Weak market data has also weighed on iron ore prices, analysts said.
Blast furnace capacity utilisation rates among 247 Chinese steelmakers surveyed by industry data and consultancy provider Mysteel fell for a third week in a row to 90.62% in the period from October 13 to 19.
Many steel mills in China, the world’s biggest steelmaker, have shut down furnaces for maintenance in recent weeks, seeking some respite from mounting losses amid weak sales, Mysteel said.
Other steelmaking materials on the Dalian Exchange also fell, with coking coal and coke falling 2.6 percent and 1.7 percent, respectively.
Steel prices on the Shanghai Futures Exchange also fell. Rebar futures fell 1.6 percent, hot-rolled coil futures fell 1.1 percent, and stainless steel futures fell 1 percent.