MANILA Benchmark steel prices in China hit two-week lows on Monday, as surging COVID-19 infections in the world’s biggest steel producer and metals consumer fanned worries over the country’s economic growth prospects.
Fears of potentially wider and tougher restrictions also weighed on prices of steelmaking ingredients such as iron ore and coking coal.
Construction steel rebar, for May delivery, on the Shanghai Futures Exchange fell as much as 3.4% to 4,728 yuan ($744.73) a tonne, its lowest since March 1. Hot-rolled coil - which is steel used in car bodies and home appliances - shed as much as 2.6% to 4,994 yuan a tonne, its weakest also since March 1.
“China’s COVID-19 outbreak will undoubtedly impact national steel demand, whether the easing of ‘zero tolerance’ permits infections to grow or the government imposes sweeping lockdowns,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
“Therefore, we view the market as having peaked for the time being until this outbreak runs its course and stimulus trickles through to real demand in the second half,” he said in a note.
Iron ore’s most-traded May contract on China’s Dalian Commodity Exchange dropped as much as 4.4% to 780.50 yuan a tonne. Its front-month April contract on the Singapore Exchange dipped 3.0% to $152.90 a tonne.
Dalian coking coal tumbled as much as 6.2% and coke slumped 3.6%.
Shanghai stainless steel slipped 0.9%.
Mainland China reported 1,807 new local symptomatic COVID-19 cases on Sunday, the highest daily figure in two years and more than triple the caseload of the previous day. On Monday, it reported 1,437 new cases.
A resurgent coronavirus at home, sluggish domestic real estate market, geopolitical tensions may prompt China to further ease monetary policy, despite a widely anticipated interest rate hike by the US Federal Reserve later this week.