Steely resolve
China’s housing collapse has Aussie iron ore miners on edge. But they needn’t worry. Here’s why
China’s real estate market is in a deep freeze. House prices are falling. Banks aren’t lending. And developers are dropping like flies. The market capitalisation of Chinese real estate companies has fallen by 35% in the past year—a brutal indictment of the sector’s woes. Still, the slowdown doesn’t only have the Chinese worried; it’s got Aussies on edge, too.
Punters down under are nervous about iron ore prices and their mining industry. They’re examining the events in China, and for good reason. There are rumblings that the housing crash will dry out the construction market. A slowdown there would be bad news for Aussie iron producers as Chinese steelmakers are their main customers.
So, what will happen to iron ore prices, and how will Australia’s iron ore miners fare? In short, prices will decline as demand from China subsides, and the market switches from under to oversupplied. Yet, Australian miners will be fine because of their low costs and proximity to China.
The Australian econom…