Wednesday, November 19, 2014

China Home Price Slump Sends Iron Ore Plunging To 2009 Lows (-50% In 2014)

Iron Ore prices crashed below the critical $70/mt level overnight, lows not seen since the bottom in 2009, as China's home prices fell for the second month in a row, accelerating losses. Average property prices across China dropped 2.6% YoY in October (a bigger drop than September's 1.2% YoY slip) withonly 1 out of 70 cities seeing any positive price change (Zhengzhou +0.2% MoM). What is perhaps most entertaining is the 38.6% YoY rise in new home starts China just experienced - the biggest jump ever - as the first sign of demand (or hint from PBOC that they would 'help' with mortgages) and supply floods the market. The 'market' appears not to believe the hype.

China home prices continue to slide...
China Home Price Slump Sends Iron Ore Plunging To 2009 Lows (-50% In 2014)

With 69 of 70 cities seeing falling prices...
China Home Price Slump Sends Iron Ore Plunging To 2009 Lows (-50% In 2014)
Source: @M_McDonough

And that led to more weakness in Iron Ore (and copper) prices...
China Home Price Slump Sends Iron Ore Plunging To 2009 Lows (-50% In 2014)

which is ironic because the Chinese homebuilders went crazy in October increasing new home starts by 38.6% YoY in October...!!
China Home Price Slump Sends Iron Ore Plunging To 2009 Lows (-50% In 2014)

That will not end well.

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