China’s steel and iron ore industries are navigating a landscape of fluctuating optimism and stark reality. Recent data from the National Bureau of Statistics reveals troubling trends, as the property sector continues to decline amidst government stimulus efforts.
In the initial months of 2025, property investment and sales fell by 9.8% and 5.1%, respectively, while new construction starts plunged by 29.6% after already experiencing a significant drop in 2024. February saw new home prices decline by 4.8% from the previous year, indicating that the property sector has yet to respond positively to measures introduced by Beijing.
This disappointing data has negatively impacted iron ore prices in the market. Futures on the Singapore Exchange fell 1.1% to $102.65 per metric ton, having seen a low of $97.31 in early January and a peak of $107.81 in mid-February.
Similarly, the Dalian Commodity Exchange’s main contract closed at 781.50 yuan per ton, showing a decline from earlier highs and reflecting uncertainty in the market regarding China’s economic status. Despite these setbacks, the Chinese government is intensifying efforts to stimulate consumer demand, aiming to invigorate consumption in the economy.
One initiative involves expanding a trade-in program, allowing consumers to upgrade household appliances and vehicles through government subsidies. While this initiative may boost demand for steel in the manufacturing of appliances and vehicles, it is crucial to note that cars and durable goods comprise only about 17% of China’s overall steel demand.
A larger portion comes from construction and infrastructure, which must improve for overall steel demand to rise. Steel production in early 2025 revealed mixed results, with crude steel output at 166.3 million tons, slightly down from the previous year.
Nevertheless, daily production increased compared to late 2024, indicating potential for growth. However, the uncertainty remains high, especially with looming tariffs on steel exports to the U.S. as the sector awaits clarity on growth and economic recovery efforts by the Chinese government and the impact of foreign tariffs.