The Business Times

Iron ore tumbles below US$100 on China Covid, steel curbs

Published Tue, Aug 30, 2022 · 04:11 PM

Dalian and Singapore iron ore futures plummeted below US$100 a tonne on Tuesday (Aug 30) amid renewed worries over Covid-19 curbs and steel output restrictions in top producer China.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange ended daytime trade 5 per cent lower at 682 yuan (S$137.7) a tonne, having touched a one-week low of 680.50 yuan earlier in the session.

On the Singapore Exchange, the steelmaking ingredient’s most-active October contract was down 4.5 per cent at US$97.25 a tonne, as of 0720 GMT.

Dalian iron ore has fallen more than 20 per cent from this year’s peak at 890 yuan a tonne in June.

In the spot market, benchmark 62 per cent-grade iron ore bound for China traded at US$104.50 a tonne on Monday, down 36 per cent from a peak of US$163 in March, SteelHome consultancy data showed.

Steel prices also stretched losses after several big Chinese cities, including Shenzhen and Dalian, escalated Covid -19 restrictions to contain outbreaks.

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Rebar on the Shanghai Futures Exchange fell 3.7 per cent while hot-rolled coil dropped 3 per cent. Stainless steel shed 1.3 per cent.

The epidemic remains a “severe challenge” for China’s vast ferrous commodities industry as lockdowns are reducing demand for steel products and inputs, Huatai Futures analysts said in a note.

China’s strict zero-Covid policy and a property sector downturn have caused its economy to slow down sharply this year, prompting Beijing to step up stimulus support.

Steel production control to curb emissions in the world’s biggest iron ore consumer is also denting demand for steelmaking ingredients.

In Tangshan, China’s biggest steel-producing city, authorities and mills reportedly met on Friday to discuss capacity reduction targets.

To meet its goal, Tangshan’s average daily output for the rest of the year should be less than 314,700 tonnes, compared with 352,300 tonnes over January-July, according to industry information provider Mysteel.

Dalian coking coal tumbled 6.4 per cent and coke slumped 5.5 per cent. REUTERS

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