Iron ore slumps as China’s strict COVID rules persist
Reuters
Iron ore futures slumped with the Dalian benchmark contract hitting its lowest in two weeks, as intensified COVID-19 curbs in China and signals that its Draconian zero-case approach will be maintained weighed on sentiment.
Shanghai and other big Chinese cities, including Shenzhen, have ramped up testing for COVID-19 as infections rose following this month’s Golden Week holidays and ahead of the crucial Communist Party congress beginning October 16.
Speculations that top steel producer and iron ore consumer China would relax its zero-COVID policy after the congress had recently helped push iron ore and steel prices higher. But state-controlled People’s Daily, in a commentary on Tuesday, urged China to stick with the policy, as it warned a large-scale rebound in cases will have “a serious impact on economic and social development”.
China’s strict zero-COVID rules have caused a sharp slowdown in the world’s second-largest economy, adding to the gloomy global outlook as recession risks heightened especially in Europe.
The most-traded January iron ore on China’s Dalian Commodity Exchange fell as much as 3.3 per cent to 706 yuan ($US98.35) a tonne in early trade, its weakest since September 26. On the Singapore Exchange, benchmark November iron ore shed 1.3 per cent to $US93.35 a tonne.
Other steelmaking ingredients also tumbled, with Dalian coking coal and coke down 3.3 per cent and 4 per cent, respectively. Rebar on the Shanghai Futures Exchange fell 2.5 per cent.
