Iron ore falls as China Covid woes dent demand hopes

IRON ore futures fell on Monday (Jan 16), as reports of an increase in Covid-19 deaths in top steel producer China renewed concerns over demand.

The most-traded May iron ore on China’s Dalian Commodity Exchange ended day-time trade 4.3 per cent lower at 832.5 yuan (S$163.5) a tonne.

On the Singapore Exchange, the benchmark February iron ore was down 4.4 per cent at US$120.00 a tonne, as of 0710 GMT.

China said on Saturday nearly 60,000 people with Covid-19 had died in hospital since it abandoned its zero-Covid policy last month, a huge increase from previously reported figures that follows global criticism of the country’s coronavirus data.

China’s new home prices fell for the fifth straight month in December, as Covid-19 outbreaks hurt demand but the dismantling of strict pandemic curbs and expectations of more support measures have brightened the outlook.

“Potential downside market risks include the increased likelihood of additional Covid-19 waves, given the evolution of new variants on a virgin population,” said Atilla Widnell, managing director of Navigate Commodities.

“At the same time, we anticipate government bodies will step up the frequency and intensity of investigations into what they deem to be exorbitantly high iron ore prices,” he added.

India will seek an easing of European Union steel import quotas and tariffs in talks for a new trade deal as Indian steelmakers struggle to sell the alloy in one of the world’s big markets, a senior government official said.

Asian shares firmed as optimism about China’s reopening offset concerns the Bank of Japan might temper its super-sized stimulus policy at a pivotal meeting this week.

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The most-active rebar contract on the Shanghai Futures Exchange fell 1.5 per cent, hot-rolled coil slipped 1.4 per cent, wire rod dropped 0.8 per cent, while stainless steel rose 0.6 per cent.

Dalian coking coal fell 0.3 per cent, while coke inched 0.2 per cent higher. REUTERS