China's real estate crisis may lead to iron ore dumping

Goldman Sachs predicted in a note to the clients that the crisis gripping the Chinese real estate sector will help turn the iron ore market into a significant surplus during the second half of the year and drive prices down sharply. After the market posted a deficit of 56 million tons in the first half of the year, the bank expects a surplus of more than 67 million tonnes of the metal for the rest of the year, reflecting the sharp slowdown in steel demand outside China. The bank lowered its 3-month iron ore target to $70 a tonne from $90 and its six-month iron ore target to $85 from $110 a tonne. The issue is that the metal is closely linked to China's early real estate activity, the bank said, adding that the sector generates nearly a third of China's steel and crude demand. According to “Bloomberg” data, iron ore in Singapore rose by about 4% during the trading on 26 July 2022, before trimming its gains to trade at $109.05 per tonne.