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Could the latest news from China bode well for ASX 200 iron ore shares?


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China is stepping up support for housing construction and easing blocking in some areas. But how does this affect iron ore stocks?

ASX 200 iron ore shares include BHP Group Ltd (ASX: BHP). Rio Tinto Limited (ASX: RIA) and Fortescue Metals Group Limited (ASX: FMG).

Could China’s property woes ease?

ASX 200 iron ore stocks BHP, Rio Tinto and Fortescue are major iron ore producers. Demand for iron ore from China, along with the price of iron ore, could affect their overall earnings and share price.

News of the easing of lockdowns in Chengdu and measures to stimulate the real estate sector could increase demand for iron ore. Iron ore is used to make steel, and China is the world’s largest producer of steel.

U research note On Friday, ANZ’s head of Australian economics, David Plank, said the easing of Chengdu’s curfew had helped demand iron ore prospect. He added:

The metropolis has eased restrictions in some areas, prompting optimism that there will be no repeat of Shanghai’s two-month lockdown.

A report on measures to revive China’s real estate sector also helped sentiment.

of China industrial production grew by 4.2% higher than expected in August, according to a CNBC report.

Meanwhile, the head of a major global iron ore producer also expressed optimism about the iron ore market amid tight supply.

Vale S.A (NYSE: VALE) Luciano Ciani Pires, head of strategy and business transformation, is reported to believe that China’s lockdowns and real estate issues were evaluated in already when iron ore prices are forecast to remain between US$95 and US$100 per tonne. Siani said:

The good news is that things can get better from here on out.

Stock price snapshot

Over the past year, BHP’s share price has risen almost 4.6%, while Rio shares have lost 11%. Meanwhile, Fortescue Metals shares are up 2.6% for the year.

For perspective, S&P/ASX 200 materials Indicator (ASX: XMJ) has lost 3.5% over the past year.


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