[www.ferro-alloys.com] Iron ore and steel futures fell in China on Monday as investors sold them off after a week-long holiday amid ongoing government efforts to curb property purchases, a campaign that some are worried may cool steel demand for construction projects.

A number of Chinese cities including Beijing, Guangzhou, Shenzhen, Suzhou, Chengdu and Wuhan – in a bid to combat rising property prices – announced new restrictions on purchases and mortgage down payments during China’s National Day holiday in the beginning of October.

China’s central bank governor Zhou Xiaochuan said the government is “paying close attention” to rising property values in some cities and will take appropriate measures to promote the real estate market’s “healthy development”.

The increasing measures to restrict property price growth in China “will dampen construction demand, driving down the nation’s largest driver of commodity consumption,” said Commonwealth Bank of Australia analyst Vivek Dhar in a note.

The most-traded rebar, a construction steel product, on the Shanghai Futures Exchange was down 1.4 percent at 2,232 yuan ($335) a tonne by 0243 GMT after falling as far as 2,209 yuan, the lowest since Sept. 19.

On the Dalian Commodity Exchange, iron ore was off 1 percent at 403.50 yuan. The steelmaking raw material touched 398 yuan earlier, a level last seen on Sept. 22.

Still, others said longer term that China’s recovering economy will prevent a price collapse.

Activity in China’s manufacturing sector expanded again in September, an official survey showed on Oct. 1, which may indicate that recent positive momentum can be sustained.

The measures on the property market “may in a sense affect sentiment but we don’t really see a big crash in new (housing) starts because China’s underlying economic condition is improving,” said Helen Lau, analyst at Argonaut Securities in Hong Kong.

Activity in the physical iron ore markets may pick up this week after slow trading during China’s Oct. 3-7 holiday.

Iron ore for delivery to China’s Tianjin port stood at $54.40 a tonne on Friday, the lowest since July 1 and down 1.5 percent for the past week, according to The Steel Index.

“So long as these restrictions are applied to only tier 1 and tier 2 cities we may still see construction volumes lift in tier 3 cities and below,” Commonwealth’s Dhar said in the note.

The lower tier cities accounted for 80?90 percent of new construction volumes during China’s commodity boom and could still push China’s commodity demand higher, said Dhar.

**Article from Internet for reference only

Iron Ore Prices Surge After Golden Week In China, But That Doesn't Guarantee The Rally Will Continue

[www.ferro-alloys.com] Iron ore spot markets spluttered back to life on Monday, corresponding with the end of the week-long Golden Week holiday in China.

As was the case in 2014 and 2015, the first move post Golden Week celebrations was to the upside.

According to Metal Bulletin, the spot price for benchmark 62% fines increased by 1.41% to $56.65 a tonne. It largely reversed the 1.45% drop seen on September 30 — the last trading date before Golden Week began — and left the year to date gain bang on 30%.

Despite the outsized move in the benchmark price, analysts at Metal Bulletin said it was “a relatively quiet day” in terms of market activity.

Suggesting that the move in spot markets may continue today, Chinese iron ore futures surged higher in overnight trade, tracking similar gains in rebar and coking coal prices.

The most actively traded January 2017 iron ore futures contract closed at 416.5 yuan, up 2.97% for the session.

Rebar and coking coal futures also added 2.8% and 1.72% respectively, suggesting the move was linked to sentiment towards the steel market.

While spot and futures markets are looking decidedly bullish, this kind of surge after Golden Week has been seen before. Perhaps of more importance, in the past two years, the initial surge has not only reversed but heralded the start of a prolonged slump in prices.

After initially jumping close to 6% following Golden Week in 2014, the benchmark spot price subsequently slumped by more than 15% into year-end.

A year later, after popping more than 6% in the three days following the holiday, the price tumbled close to 24% over the remainder of the year, briefly hitting the lowest level on record in the process.

While this is only history, and may have been driven by unique circumstances at the time, given continued efforts from Chinese policymakers to cool housing activity in some of the nation’s largest cities, it’s a safe bet that many will be watching the price action carefully in the days ahead, particularly as this is traditionally a slower period for construction activity in China.

**Article from Internet for reference only

• [Editor:tianyawei]