Metal stocks hit as China's iron ore slumps to 3-month low on sluggish demand; NMDC tanks 4%; Vedanta flat
Vedanta, National Mineral Development Corporation (NMDC), Tata Steel traded lower on Tuesday, February 20 after data suggested that iron ore slumped to a three-month low as investors fretted that steel demand wouldn’t stage a strong recovery in China after the Lunar New Year break. Futures sank more than five per cent in Singapore to hit the lowest intraday price since early November, following a drop in the week’s opening session.
The weakness came even after Chinese banks cut a key reference rate for mortgages by a record amount, throwing more weight behind property-sector rescue efforts, according to a report by Bloomberg. Iron ore is one of the worst-performing major commodities so far in 2024 as investors assess prospects for Chinese demand.
The property crisis has been a major drag on the second-largest economy over the past couple of years despite a series of stimulus measures aimed at resolving the issue. “Headwinds from China’s property sector — 30 per cent to 35 per cent of China’s steel demand and 20 per cent to 25 per cent of China’s total GDP, with related sectors included — will likely persist, albeit at a more moderated pace than last year," said Vivek Dhar, Commonwealth Bank of Australia analyst in a note.
Also Read: NMDC share price jumps over 7% on robust Q3 results; here's what brokerages say The iron ore market is expected to ‘broadly balanced’ in 2024, BHP Group Ltd. said in a summary as it released earnings.
Still, the world’s biggest miner cautioned there were “multiple uncertainties" around that outlook, including over how China’s regulators managed the local steel industry this year. Shares of public-sector undertaking (PSU) NMDC - the country's largest producer of iron ore, plunged four per cent
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