“Since the beginning of 2024, the price of iron has fallen by almost a third”

LIron is no longer expensive. Its price has continued to fall over the months. The price of iron ore even fell below $90 (€81) per tonne on Monday, September 9, on the Singapore futures market. A level it had not reached since November 2022. In January, it peaked at $135 per tonne. Since the start of the year, the price of iron has thus fallen by almost a third.

The fall is severe. Even if investors are used to its ups and downs, they must have nerves of steel to withstand the blows of the iron price. We remember that in May 2021 it was trading at nearly $230 per tonne, flirting with its record. A surge fueled by the re-ignition of the Chinese economic engine, put on hold during the Covid-19 crisis. By stepping on the gas, Beijing propelled industrial metals in its wake.

Since then, the markets have continued to monitor the rhythm of the economic heart of the planet. However, the health bulletins of China, the world’s leading consumer of raw materials, released over the months, show signs of running out of steam. Above all, the real estate sector, one of the fuels of the accelerated growth of the former Middle Kingdom, is taking a hit, dragging down with it iron ore, the main component of steel, highly prized by builders.

Investors bet on gold

When Chinese real estate giant Evergrande began to falter three years ago, there was palpable concern in the markets. Eventually, the €260 billion debt-laden behemoth was placed in receivership in January, and its boss is now in custody. Even as the Beijing government tries to plug the holes, the construction sector’s financial edifice is showing its fragility, ready to collapse like a house of cards blown away by the explosion. After Evergrande, Country Garden revealed itself to be suffocating under its mountain of accumulated debt, and Vanke, another developer, is also under threat.

In this context, iron ore is looking gloomy. Investors are hoping that the Chinese steel industry will recover. In the meantime, they are betting on gold. On Friday, September 13, an ounce of the yellow metal passed $2,580. Gold has set a new record.