The iron ore price plunged on Monday as stringent covid-19 restrictions prompted traders to be cautious and fuelled concerns over global demand.
The most-active iron ore futures on the Dalian Commodity Exchange, for September delivery, dived as much as 7% to 796 yuan ($118.45) a tonne.
The capital city of Beijing has implemented rounds of covid-19 tests, closed entertainment venues, banned dine-in services at restaurants, and urged staff in certain areas to work from home, as part of efforts to persist in its “dynamic-zero approach.”
“It’s not looking pretty this week with even more negative covid-related headlines for Beijing, Guangdong, and Jilin released over the weekend,” said Atilla Widnell, managing director with Navigate Commodities.
“It’s looking increasingly likely that Chinese blast furnaces will struggle to justify high utilization and operating rates in a demand- and margin-negative environment,” Widnell added.
China’s iron ore imports in April fell nearly 13% to 86.06 million tonnes from the same period a year-ago, data from the customs administration showed.
“Despite positive signal from the Politburo meeting, current downstream demand is still largely affected by the pandemic,” analysts with SinoSteel wrote in a note, adding that steel inventories increased while apparent consumption was sluggish.
Production of LME deliverable KAS-branded aluminium at Kazakhstan’s Eurasian Resources Group has reached the four-million-tonnes milestone
