China-exposed commodities take a COVID-control tumble

LAUNCESTON, Australia, April 26 (Reuters) - Commodities with the biggest exposure to China are starting to price in a worsening COVID-19 situation as fears of more lockdowns worsen an already soft demand outlook.

Iron ore futures in China plunged almost 11% on Monday. London-traded copper and aluminium slipped to the lowest level since early February.

The Beijing city government ordered mass testing for COVID-19, raising fears among residents that a lockdown was imminent. read more

Several major cities, including financial centre Shanghai, remain under various restrictions as China maintains its tough COVID-control policy.

Up until this week industrial commodities were still trading with the view that Beijing would be able to contain COVID-19 outbreaks, and, furthermore, would aggressively stimulate its economy in coming months to boost growth close to the annual target of 5.5%.

But the ongoing lockdowns, with Shanghai now entering its fourth week, have eroded confidence in China's COVID-19 policy, while also hitting physical demand for industrial metals as factories are forced to close or work under restrictions.