MANILA: Iron ore futures dipped on Thursday, with the Dalian benchmark hitting a three-week low, as hopes faded for China to relax its stringent zero-Covid policy, while waning demand for the steelmaking ingredient dragged spot prices to an 11-month low.

Signals that Beijing will stick with its draconian measures to control Covid outbreaks after a pivotal Communist Party congress beginning Oct. 16 weighed on futures markets.

Market participants are closely watching how China will address challenges facing its economy, including a downturn in the property sector.

Ahead of the party meeting, the world’s top steel producer ramped up Covid testing, extended quarantine times and closed some public spaces, as infections rose. In Hebei, China’s top steel-producing province, mills were asked to cut sintering operations by as much as 50% to improve air quality during the meeting, according to reports.

The most-traded January iron ore on China’s Dalian Commodity Exchange fell as much as 1.7% to 701.50 yuan ($97.75) a tonne, its lowest since Sept. 22. On the Singapore Exchange, benchmark November iron ore dropped 0.9% to $92.95 a tonne.

Spot 62%-grade iron ore settled at $95.50 a tonne on Wednesday, SteelHome consultancy data showed, the weakest since November 2021. Other steelmaking ingredients also remained under pressure. Dalian coking coal and coke slipped 0.1% and 0.2%, respectively.

Ferrous metals on the Shanghai Futures Exchange were somewhat supported. Rebar dipped 0.1%, while both hot-rolled coil and wire rod gained 0.2%, and stainless steel climbed 0.5%.

“We should not be overly pessimistic about finished products,” Huatai Futures analysts said in a note, pointing out that reduced steel production could eventually help prop up prices.

“In the short term, we will be dominated by macroeconomic factors and increased uncertainties (but will) maintain a relatively neutral view,” they said.