Iron ore sinks to three-week low as China demand sentiment wanes

Iron ore futures fell below $100/ton in Asia on Thursday, as investors doubt whether China’s latest stimulus moves will do enough to boost construction activity and steel demand.

China’s housing minister announced a plan to expand a program to support the completion of unfinished housing projects to 4T yuan (~$560B), as the government tries to ease the country’s real estate crisis.

However, analysts said the policies are focused on resolving the backlog of housing inventory, which provides little help for steel demand in the short term.

Iron ore futures (SCO:COM) in Singapore slumped 5% to $99.50/ton to the lowest since September 26, while copper, aluminum and zinc all dropped at least $1 on the London Metal Exchange.

Iron ore had rallied from a two-year low below $90/ton in late September to above $110, but prices have faded as a series of government briefings on economic policy fell short of expectations.

China’s economy remains under pressure, with Q3 growth likely coming in at its weakest pace in six quarters, according to a Bloomberg survey.

Potentially relevant stocks include BHP (NYSE:BHP), Rio Tinto (RIO), Vale (VALE), Fortescue (OTCQX:FSUMF), Glencore (OTCPK:GLCNF) (OTCPK:GLNCY) and Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY).