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) with only 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...

 

With 69 of 70 cities seeing falling prices...

Source: @M_McDonough

 

And that led to more weakness in Iron Ore (and copper) prices...

 

which is ironic because the Chinese homebuilders went crazy in October increasing new home starts by 38.6% YoY in October...!!

 

That will not end well.