Dalian and Singapore iron ore futures fell below $100 on Friday on fears over waning demand for steel in China after data showed economic growth contracted sharply in the second quarter due to COVID restrictions.
The most traded iron ore, for September delivery, on China’s Dalian Commodity Exchange slumped 9.1% to a session low of 652 yuan ($96.67) a tonne, its weakest since Feb. 25.
It was on track for a weekly fall of more than 12%. On the Singapore Exchange, the front-month August contract for the steelmaking ingredient dropped 2.6% to $97.60 a tonne, its lowest since November, putting it on track for a weekly loss of more than 11%.
Mirroring weakness in iron ore demand, China’s crude steel output fell 3.3% in June compared with a year earlier, and was down 6% from May.
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Gross domestic product fell 2.6% in the second quarter from the previous quarter, official data showed, compared with expectations for a 1.5% decline.
Annual growth also slowed significantly, highlighting the colossal toll on activity from widespread COVID lockdowns. Some indicators in June, however, pointed to a recovery for the world’s second-largest economy, helping traders trim losses.
China’s industrial output grew 3.9% in June from a year earlier, quickening from a 0.7% rise in May.
But several mills in China have idled blast furnaces or placed them under maintenance earlier than usual due to weak margins and high inventories, and it remains uncertain when these facilities will be restarted.
Chinese steel producers are facing more headwinds with bad weather and recurring COVID curbs, and as the crisis in the property sector is ongoing.
“COVID-induced lockdowns in conjunction with adverse weather conditions look likely to continue to undermine domestic steel consumption,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Rebar and hot-rolled coil on the Shanghai Futures Exchange both shed 4.9%.
Stainless steel slumped 3.7%.
Dalian coking coal dropped 2.7% and coke lost 4.7%.
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