The Australian dollar is falling after hitting a six-month high two weeks ago on growing concerns about the economic health of China, Australia’s largest trading partner.
Prices for iron ore, Australia’s most lucrative export, have fallen below $110 a tonne after rising well above $200 a tonne during the pandemic. The key to the decline in iron ore prices is China’s lack of steel production for home construction.
“As long as the Chinese government doesn’t provide real incentives and put real money into the idea of rebuilding the property market, iron ore prices will remain low,” said Grady Wolf, a market analyst at Bell Direct.
China’s economic problems began to grow last year when its real estate market collapsed.
In the years before this, China has not been able to buy enough Australian iron ore, which is used to manufacture steel for real estate construction. Wolf said that the Chinese government’s efforts on the financial effects of the real estate route were unsuitable.
“But he doesn’t need to live.
“Until we do see that, and until we see the data show the economy is showing signs of material growth post the pandemic, we’re not going to see a recovery in the iron ore price.
“For example last week China’s economy grew 4.7 percent from April to June, and that missed analysts’ expectations of growth of 5.1 percent.
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