Worst may be over for iron ore markets

THE worst may be over for iron ore markets after it staged an impressive recovery over the past 2 months.

In July, iron ore prices came under pressure following the announcement of the Chinese government's measures to contain inflation as well as to lower steel production as part of the country's efforts to achieve carbon neutrality by 2060. In addition, Evergrande Group's debt problems brought about pessimism across the property and construction sectors, causing the sentiment in the iron ore market to deteriorate even further. This resulted in a plunge in prices (as seen by the rolling second contract month of SGX iron ore futures) by 60 per cent within a period of 5 months.

After hitting an 18-month low in mid-November, iron ore took a turn for the better following optimistic announcements from the Chinese government; including pledging more investments into the infrastructure sector and easing fundraising policies for the property sector. In addition, some Chinese banks were told by regulators to issue more loans to property firms so as to ease liquidity strains across the industry.