MANILA: Steel futures and prices of steelmaking ingredients in China fell on Monday as a surge in local Covid-19 cases prompted traders to book some profit from a recent rally spurred by the easing of coronavirus restrictions.
Top steel producer China is in the first of an expected three waves of Covid-19 cases this winter, according to the country’s chief epidemiologist, forcing many people to stay home to protect themselves.
The most-traded iron ore for May delivery on China’s Dalian Commodity Exchange slumped as much as 3.9% to 792 yuan ($113.49) a tonne, after a three-session rally that had brought it to a six-month high. On the Singapore Exchange, the steelmaking ingredient’s benchmark January contract was down 2.2% at $108.85 a tonne, as of 0330 GMT.
China’s COVID-19 surge “might provoke an increasing proportion of the nervous population to wait out the current wave at home, destroying economic activity in the process”, Navigate Commodities Managing Director Atilla Widnell said.
The market pullback was broad-based even as Beijing, in a statement on Friday following an agenda-setting meeting, pledged to focus on stabilising its $17-trillion economy in 2023 and step up policy adjustments to ensure key targets are hit. Rebar on the Shanghai Futures Exchange fell 2.8%, hot-rolled coil dipped 3.1%, wire rod shed 2%, and stainless steel tumbled 4.2%. Dalian coking coal slumped 5.2% and Dalian coke dropped 5.8%.
Current market fundamentals were also depressing. Average daily crude steel production among member mills of China Iron & Steel Association (CISA) eased over Dec. 1-10 after rising during the prior two 10-day periods, down by 2.1% or 41,800 tonnes from late November to 1.99 million tonnes, Mysteel consultancy reported, citing CISA data.
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