Iron ore miners are getting smashed on Monday as China’s economic rout is poised to deepen.
Fortescue (ASX: FMG) has headlined the losses, down -6% ($19.59) and smack bang on its 200-day moving average.
The losses are largely aligned with the deterioration in iron ore prices, down to US$131.9 a tonne.
There's a lot of negative developments coming out of China as its economy takes a massive hit from prolonged lockdowns.
In chronological order:
Iron ore imports for China fell -7.1% to 354m tonnes for January to April
The average price was down -29.5% to 752 yuan a tonne (US$112)
Over the weekend, Chinese Premier Li Keqiang warned of a “complicated and grave” employment situation, according to Bloomberg
Last Friday, China reaffirmed its commitment to the controversial zero-covid strategy
Reiterated that any lax will “lead to massive numbers of infections, critical cases and deaths, seriously impacting economic and social development and people’s lives and health.”
Beijing is still at odds with its covid outbreak, mass testing the capital’s 25m residents with various restrictions in place
Last Thursday, China’s services PMI fell to 36.2 in April, the second-lowest reading since the survey began in November 2005
The index hit a record low of 26.5 in February 2020
A figure below 50 indicates contraction
China will release data relating to industrial production, retail sales and fixed asset investment next Monday, May 16.
There are early signs that Chinese lockdowns appear to be easing from recent highs - but still elevated.
Chinese policymakers intend to shore up stimulus to steady the economy. Though, excess infrastructure spending goes against the nation's tight grip on borrowing in its highly leveraged real estate sector.
The South China Morning Post reported that "While clearly warranted, we wonder whether infrastructure investment can really grow fast enough in the remainder of the year to reach the 5.5 per cent growth target anyway.”
Finance Writer & Social Media
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