The iron ore price fell on Tuesday after a spokesperson for China’s
state planner said the country would keep reducing steel output this year.
Adding to concerns over demand prospects for the key steelmaking
raw material, China’s steel production hub Tangshan implemented another round
of covid-19 lockdowns in
four districts for at least three days from Tuesday, the local government said
in a statement.
According to Fastmarkets MB, benchmark 62% Fe fines imported into
Northern China were changing hands for $149.55 a tonne during morning trading,
down 2.27% compared to Monday’s closing.
The most-traded September iron ore contract on China’s the Dalian
Commodity Exchange ended daytime trade 3.3% lower at 887 yuan ($139.18) a
tonne, after touching a two-week high of 942 yuan earlier in the session.
On the Singapore Exchange, the most-active May contract was down
2.3% at $151.35 a tonne.
China will reduce crude steel output this year, after slashing
production in 2021 in line with its goal to control carbon emissions, said a
spokeswoman for China’s state planner, the National Development and Reform
Expectations for additional policy support for the world’s
second-largest economy, which faces risks of a sharp slowdown due to the
lockdowns and headwinds brought on by the Ukraine war, have
pushed Dalian iron ore prices up by more than 30% this year.
However, the timing and extent of the anticipated additional
stimulus measures remain uncertain. Chinese authorities are walking a tight
rope as they try to stimulate growth without endangering price stability.
“It remains to be seen how extensive the Chinese policy response
will be,” J.P. Morgan economists wrote in a note.
“Slower Chinese growth is expected to linger into 3Q before
rebounding, raising the risk of near-term spillovers to regional trading
partners and commodity exporters,” they said.