Iron ore futures slip as China Covid jitters flare up
IRON ore futures edged down on Friday (Dec 23), trapped in a tight range, as top metals consumer China grappled with widening Covid-19 outbreaks that could derail the recovery of the world’s second-largest economy and top steel producer.
Fears of widespread Covid-19 infections have forced many businesses, notably in China’s financial hub Shanghai, to shut down. They have also dampened investor optimism that had been spurred by Beijing’s oft-repeated pledge to step up policy support and stimulate economic growth in 2023.
A Shanghai hospital has told its staff to prepare for a “tragic battle” with Covid-19, as it expects half the city’s 25 million people to get infected by the end of the year.
“The reality is that in the whole country, infections have entered the peak season. Production and other activities have stagnated,” Sinosteel Futures analysts said in a note.
Iron ore’s most-traded May contract on China’s Dalian Commodity Exchange ended daytime trade 0.2 per cent lower at 825 yuan (S$159) a tonne, and was little changed from last week.
On the Singapore Exchange, the steelmaking ingredient’s benchmark January contract slipped 0.1 per cent to US$110.75 a tonne as at 0729 GMT, trapped within US$107-113 levels this month.
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Supply-side pressures, as “global iron ore shipments have rebounded significantly”, also tempered investor optimism about a price rebound next year, Sinosteel analysts said.
Steel benchmarks were largely subdued, with rebar on the Shanghai Futures Exchange up 0.1 per cent, while wire rod slipped 0.3 per cent and hot-rolled coil dipped 0.1 per cent. Stainless steel shed 0.6 per cent.
The blast furnace capacity utilisation rate among 247 Chinese steel mills covered by Mysteel consultancy’s regular survey dropped by a quarter percentage point to 82.39 per cent over Dec 16-22 from a week ago, as they reined in output amid tepid demand.
Other Dalian steelmaking inputs were also under pressure, with coking coal and coke down 2.1 per cent and 1.8 per cent, respectively. REUTERS
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