MANILA: Benchmark Dalian and Singapore iron ore futures fell on Wednesday as concerns over COVID-19 curbs in China and the approaching off-season for construction activity in the world’s biggest steel producer soured sentiment.
China is maintaining a zero-tolerance policy towards local COVID-19 cases, moving quickly to quell any local outbreaks by imposing mobility restrictions.
One local COVID-19 case has prompted Dongxing, a Chinese border city next to Vietnam, to order its residents to stay at home from Wednesday and halt public transport, state broadcaster CCTV reported.
China is expected to stick to this strict approach as Beijing prepares to host the Winter Olympic Games to be held in February.
The most-traded iron ore for May delivery on China’s Dalian Commodity Exchange ended the morning trade 0.9% lower at 690 yuan ($108.27) a tonne, retreating after a four-session rally.
Iron ore’s most-active January contract on the Singapore Exchange was down 0.5% at $126.65 a tonne.
Iron ore prices hit multi-week highs earlier this week, despite China’s imported stockpiles scaling a 3-1/2-year peak, in a rally fuelled by the prospect of stimulus-driven demand in China next year.
Spot prices for the key steelmaking ingredient jumped to $129 a tonne on Tuesday, the highest since Oct. 12, based on SteelHome consultancy data.
Analysts, however, warned that steel demand in China is about to weaken again in the coming colder days when construction activity slows.
“(Steel demand) is gradually shifting from the peak season to the off-season cycle, and consumption is expected to gradually pull back from the previous month,” Sinosteel Futures analysts said in a note.
Construction steel rebar on the Shanghai Futures Exchange and hot-rolled coil both fell 1.3%, extending their losses after a six-day rally. Stainless steel slipped 0.1%. Dalian coking coal shed 0.8%, but coke rose 0.6%.
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