Iron ore is among the most vulnerable to China’s slowdown risks, as the country’s property market constitutes the bulk of steel demand.
China, the world’s biggest consumer of iron ore, has continued to act as a drag on demand this year. A broad economic slowdown and, in particular, the crisis in the property sector have weighed on iron ore and other industrial metals. The property sector accounts for about 40% of demand for iron ore. We’ve seen plenty of property support measures this year but so far, they have failed to provide any meaningful impact on metals demand.
In September, Beijing released a slew of stimulus measures – its largest stimulus package since the Covid-19 pandemic, including interest rate cuts and targeted support for the property sector.
China’s new home starts – the biggest steel demand driver – have continued to fall, now down more than 20% year-to-date. This should continue to suppress steel demand in 2025. The country’s recent stimulus policies have focused on clearing property inventories rather than boosting new starts, and this will limit the impact on steel demand as it requires new construction rather than clearing unsold stock.
A subdued domestic market has spurred exports this year. China’s steel exports have hit their highest level since 2016, with volumes up more than 20% so far this year. This is, however, likely to slow down moving forward, with more countries globally imposing restrictions or conducting anti-dumping investigations against Chinese steel products. This would prove a further drag on iron ore demand.
The increase in exports has also been fuelled by a slump in domestic prices. Rebar and hot rolled coil collapsed to the lowest level seen since 2017.
