Shanghai steel futures dip

Fears of potentially wider and tougher restrictions also weighed on prices of steelmaking ingredients such as iron ore and coking coal.

Construction steel rebar, for May delivery, on the Shanghai Futures Exchange fell as much as 3.4% to 4,728 yuan ($744.73) a tonne, its lowest since March 1. Hot-rolled coil - which is steel used in car bodies and home appliances - shed as much as 2.6% to 4,994 yuan a tonne, its weakest also since March 1.

“China’s COVID-19 outbreak will undoubtedly impact national steel demand, whether the easing of ‘zero tolerance’ permits infections to grow or the government imposes sweeping lockdowns,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.

“Therefore, we view the market as having peaked for the time being until this outbreak runs its course and stimulus trickles through to real demand in the second half,” he said in a note.

Iron ore’s most-traded May contract on China’s Dalian Commodity Exchange dropped as much as 4.4% to 780.50 yuan a tonne. Its front-month April contract on the Singapore Exchange dipped 3.0% to $152.90 a tonne.

Dalian coking coal tumbled as much as 6.2% and coke slumped 3.6%.

Shanghai stainless steel slipped 0.9%.