China is stepping up support for the housing industry and easing lockdowns in some areas. But how does this impact iron ore shares?
ASX 200 iron ore shares include BHP Group Ltd (ASX: BHP). Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG).
Could China's property woes ease?
ASX 200 iron ore shares BHP, Rio Tinto and Fortescue are all major iron ore producers. Demand for iron ore from China, along with the iron ore price, can impact their overall profit and share price.
News on easing lockdowns in the city of Chengdu and measures to stimulate the property sector could boost demand for iron ore. Iron ore is used to make steel, and China is the world's largest steel producer.
In a research note on Friday, ANZ head of Australian economics David Plank said easing curfews in Chengdu have aided the demand outlook for iron ore. He added:
The megacity has relaxed restrictions in some areas, spurring optimism that there won't be a repeat of Shanghai's two-month lockdown.
A report on measures to revive China's real estate sector also helped sentiment.
China's industrial production leapt 4.2% in August, higher than expected, a report from CNBC stated.
Meanwhile, an executive at a major global iron ore producer has also expressed optimism for the iron ore market amid tight supply.
Vale SA (NYSE: VALE) head of strategy and business transformation Luciano Siani Pires reportedly believes China's lockdowns and real estate issues have been priced in already, with iron prices predicted to hold at US$95 to US$100 a tonne. Siani said:
The good news is that from now on it can only get better.
Share price snapshot
The BHP share price has gained nearly 4.6% in the past year, while Rio shares have lost 11%. Meanwhile, the Fortescue Metals share price has gained 2.6% in a year.
For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) has lost 3.5% in the past year.
