Iron ore flipped to losses as risk aversion across financial markets escalated and investors assessed the demand prospects in top consumer China.
Stocks slid with bonds Friday as inflation, rising borrowing costs and China’s virus lockdowns depressed sentiment. The outlook for iron ore is being complicated by the country’s Covid-zero target.
At a meeting held Thursday, the Politburo reiterated its support for a lockdown-dependent approach to contain the virus. That follows President Xi Jinping’s bold commitment last week to boost infrastructure construction to rescue economic growth, which has come under pressure from the nation’s Covid strategy.
“The meeting held yesterday revolved mainly around epidemic control,” Wei Ying, a ferrous analyst at China Industrial Futures, said. “This indicates that restrictions will hold in the near future, which has sparked some concerns” about the impact on the economy.
Meanwhile, post-holiday demand for the steelmaking ingredient has picked up only slightly, according to a note by Holly Futures. Virus-related lockdowns have slowed down the movement of iron ore shipments, while overall market demand faces great uncertainty from the spread of Covid in China, it said.
Futures in Singapore fell 2.8% to $141.50 a ton, after closing 1.7% higher Thursday, as of 11.56 a.m. local time. Futures in Dalian slipped 1.6%. Steel rebar and hot-rolled coil declined in Shanghai.
