Iron ore bounces off 2-week low, but China’s Covid surge caps gains

MANILA: Benchmark Dalian and Singapore iron ore futures rebounded on Wednesday from two-week lows, buoyed by hopes of a pick-up in demand as favourable weather in top steel producer China is expected to encourage mills to ramp up output.

But the fallout from China’s soaring COVID-19 cases and the Russia-Ukraine conflict remained top of mind for traders, keeping optimism in check.

The most-traded iron ore, for May delivery, on China’s Dalian Commodity Exchange was up 0.8% at 770.50 yuan ($121.19) a tonne by 0253 GMT, after earlier touching 782 yuan.

On the Singapore Exchange, the front-month April contract climbed 4.2% to $143.45 a tonne, after six straight sessions of losses.

Other steelmaking ingredients also rebounded from two-week lows, with Dalian coking coal up 1.1%, while coke gained 0.1%.

“With the closing of the national ‘two sessions’ and the Winter Paralympic Games, and the heating season about to end, steel mills in the northern region are expected to resume production,” analysts at Sinosteel Futures said in a note.

Also picking up from two-week lows, construction steel rebar on the Shanghai Futures Exchange rose 0.9% and hot-rolled coil climbed 0.5%.

Shanghai stainless steel advanced 1.5%, rising for a third day amid firmer prices of raw material nickel.

China said on Tuesday it had seen increasing positive changes in its economic performance backed up by surprisingly good economic data, but the impacts of the latest COVID resurgence needed to be watched.

“Our main concern at this stage is that COVID cases will be found in the Zhoushan port resulting in further supply disruptions to global trade,” ING analysts said, referring to one of the world’s biggest ports.

Amid Tuesday’s sell-offs in China’s ferrous futures markets, spot iron ore slumped to a two-week low of $141.50 a tonne, SteelHome consultancy data showed.