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 top steel-producing Hebei province, mills were asked to cut sintering operations by up to 50 percent to improve air quality during the meeting.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 2.5 percent lower at 696 yuan ($96.79) a ton, after hitting its lowest since Sept. 22 at 695 yuan earlier in the session.
Singapore Exchange’s benchmark November iron ore was down 1.1 percent at $92.75 a ton by 0715 GMT.
Spot 62 percent-grade iron ore settled at $95.50 a ton on Wednesday, SteelHome consultancy data showed, the weakest since November 2021.
Other steelmaking ingredients also fell, with Dalian coking coal and coke down 1.2 percent and 0.7 percent, respectively.
Ferrous metals on the Shanghai Futures Exchange mostly dropped. Rebar dipped 0.6 percent, hot rolled coil shed 0.9 percent, wire rod lost 0.2 percent, while stainless steel climbed 0.4 percent.
“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. – Reuters
