MANILA: Iron ore prices hovered around two-week lows on Tuesday as sentiment across China’s ferrous complex remained gloomy, with fresh COVID-19 outbreaks clouding demand prospects in the world’s top steel producer. The most-traded September iron ore futures contract on China’s Dalian Commodity Exchange fell as much as 2.3% to 882 yuan ($130.87) a tonne during morning trade, the lowest since May 31 and putting it on track for a third straight session of losses.

On the Singapore Exchange, the most-active July contract for the steelmaking ingredient was down 1.8% at $132.10 a tonne, as of 0415 GMT.

Benchmark 62%-grade iron ore’s spot price in China was assessed at $138 a tonne on Monday by SteelHome consultancy, the weakest since May 30. China’s hardline zero-COVID policy and fresh infections in Beijing and Shanghai prompted mass testing and renewed restrictions.

“The risk of further lockdowns remains high while the dynamic-zero COVID-19 approach remains in place,” Fitch Ratings said in a statement. Fitch Ratings cut its economic growth forecast for China this year to 3.7%, from 4.8%, to reflect the impact on activity of recent lockdown measures. China’s goal to further reduce crude steel output this year to curb emissions also weighed on sentiment, with Baocheng Futures analysts saying mills in Jiangsu, Hebei, Xinjiang and other places have recently been notified of the reduction target. China’s crude steel output rose 5.1% in April from a month earlier, but its January-April production was down 10.3% from a year ago.

China was set to release on Wednesday its steel production data for May, when output is usually at its peak, according to analysts at Westpac. Construction steel rebar on the Shanghai Futures Exchange fell 2% while hot-rolled coil shed 2.2%. But the sell-off was most intense for stainless steel, which tumbled 3.6% to the lowest since March 3. Dalian coking coal lost 1.2% and coke dipped 1.5%.