Iron ore fell for the first time in nine sessions as Goldman Sachs Group Inc. warned that property weakness would likely be a multiyear growth drag for China’s economy.
The steel-making staple dropped almost 5% in Singapore after the investment bank said in a note that it sees persistent problems in Chinese real estate, mainly related to lower-tier cities and private developer financing. There was no quick fix and the property recovery was likely to be “L-shaped,” according to Goldman.
The warning comes after iron ore jumped 14% over the previous eight sessions as authorities stepped up wider measures to revive the stalled recovery, and also on hopes for more targeted policy to improve the property market. However, Goldman said it didn’t expect more housing-specific stimulus and suggested Beijing would likely seek to reduce economic and fiscal reliance on the sector.
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