SGX iron ore snaps rally as China Covid woes spark unrest
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IRON ore futures in Singapore slumped more than 3 per cent on Monday (Nov 28), retreating after a three-day climb, as protests against stringent Covid-19 restrictions in top steel producer China prompted caution.
The steelmaking ingredient, however, remained supported on the Dalian Commodity Exchange following Friday’s announcement of a further cut in banks’ reserve requirement ratio in China to bolster a slowing economy.
Benchmark December iron ore on the Singapore Exchange was down 1.3 per cent at US$97.90 a tonne, as of 0700 GMT, after dropping as much as 3.2 per cent earlier in the session.
The most-traded Dalian iron ore for January delivery ended daytime trade 2.4 per cent higher at US$104.86 a tonne.
The Dalian benchmark hit 764.50 yuan (S$146) a tonne earlier in the day, its highest since June 17, extending last week’s gains spurred by hopes for steel demand recovery as China is taking further steps to shore up an ailing domestic property sector.
News about embattled property developer China Evergrande Group expecting to firm up debt restructuring proposals next year also added to the upbeat sentiment, said Marex analyst Zenon Ho.
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“Traders remain focused on further stimulus into next year,” Westpac analysts said in a note.
Some of the optimism, however, has dissipated amid protests in several Chinese cities against the country’s strict Covid-19 curbs.
“This week’s western headlines will be dominated by whether Chinese authorities stick to their guns on the no-nonsense zero-Covid strategy or repeal these measures,” Navigate Commodities Managing Director Atilla Widnell said.
Sentiment was also mixed on the Shanghai Futures Exchange with rebar up 1.3 per cent and hot-rolled coil advancing 1.5 per cent, while wire rod slipped 1 per cent and stainless steel dipped 0.1 per cent.
Other Dalian steelmaking inputs also rose, with coking coal and coal up 0.7 per cent and 0.6 per cent, respectively. REUTERS
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