Iron ore futures retreated on Friday as China indicated controlling COVID-19 outbreaks was still a priority, although the steelmaking ingredient stayed on track for its steepest weekly rise since March.
Iron ore’s most-traded September contract on the Singapore Exchange was down 3.7 percent at $114.30 a ton, after touching its highest since June 30 at $119.90 in the previous session.
On China’s Dalian Commodity Exchange, September iron ore ended daytime trade 1.8 percent higher at 782 yuan ($116.11) a ton, off Thursday’s four-week peak of 798.50 yuan.
China is sticking to its “dynamic zero-COVID” policy, state media said after a high-level meeting of the ruling Communist Party on Thursday.
“It appears to us that any change in the zero-COVID policy will only happen when authorities are convinced that mutations are less virulent and vaccines/medicines are proven to be more effective. Both are unlikely to happen in the near term,” ANZ analysts said in a note.
Iron ore and steel markets suffered losses in the second quarter as COVID-19 lockdowns in China dampened demand in the world’s biggest steel producer and consumer.
But iron ore rebounded this week, with the benchmark 62 percent-grade material gaining about 15 percent in the spot market as of Thursday in response to widening steel margins and optimism about demand prospects in coming months.
Chinese steel demand in July-December is likely to rise by as much as 3 percent over first-half volume, industry news provider Mysteel quoted Luo Tiejun, vice chairman of the China Iron & Steel Association, as saying at a business conference on Thursday.
Rebar on the Shanghai Futures Exchange rose 0.6 percent, extending gains to a third day, while hot-rolled coil climbed 0.7 percent. Stainless steel advanced 1.4 percent.
Other steelmaking ingredients traded higher, with Dalian coking coal up 3.3 percent and coke rising 2.4 percent.
