Steel prices and other steelmaking ingredients also extended losses in early trade, mirroring the nervousness across Chinese financial markets over the impact of COVID curbs and global uncertainties on the domestic economy.
The most-traded iron ore, for May delivery, on China’s Dalian Commodity Exchange slumped as much as 6.4% to 742 yuan ($116.33) a tonne, its lowest since March 2. On the Singapore Exchange, the steelmaking ingredient’s front-month April contract fell 4.8% to $140.15 a tonne.
Spot prices of the benchmark 62%-grade iron ore in China sank $12.50 on Monday to $145.50 a tonne, the lowest since March 1, according to SteelHome consultancy data.
An Omicron outbreak has hit many parts of China, driving the country’s tally of new local COVID cases this year higher than last year, prompting wider restrictions.
“Along with Omicron’s risk to China’s growth outlook, the Russia-Ukraine conflict affects China’s external trade via three channels: commodity inflation, growth shocks in major trading partners especially the EU, and supply chain disruptions,” analysts at ANZ said in a note.
Such downside risks have fuelled expectations that China will further ease monetary policy, but the central bank on Tuesday kept the interest rate on medium-term loans unchanged.
