The iron ore price retreated on Tuesday as investors continued to worry about policy uncertainties amid China’s government intervention.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $135.78 a tonne during morning trading, down 1.4% compared to Monday’s closing.
The most-active iron ore futures on the Dalian Commodity Exchange, for May delivery, edged down 0.1% to 685 yuan ($108.04) per tonne at close. They were up as much as 4.9% to 719 yuan a tonne earlier during the session.
“Iron ore is now caught between two opposing policies in China,” Commonwealth Bank of Australia commodity analyst Vivek Dhar said in a note.
“Policymakers are keen to limit inflation linked to higher iron ore prices. Their determination to keep iron ore prices in check is particularly strong given their belief that non-market forces like speculation are at play.”
However, margins at steel mills are decent as authorities aim to boost economic growth, which is supporting iron ore prices, according to the note.
The country’s four biggest banks on Monday lowered mortgage rates in Guangzhou city by 20 basis points in a fresh move to support the property sector, according to people familiar with the matter.
Home sales in China have been falling since July, exacerbating a cash crunch among developers. Sales in top-tier cities started dropping late last year, data from China Real Estate Information showed, after regulators tightened financing rules to defuse risks.
Meanwhile, China’s finance minister vowed to implement bigger cuts in taxes and fees this year and strengthen coordination between fiscal and monetary policy.
(With files from Bloomberg and Reuters)
