Dalian and Singapore iron ore futures fell on Tuesday, along with Chinese steel benchmarks and other steelmaking ingredients, as Covid-19 pressures that have been dragging down China’s economy weighed on sentiment on the first trading day of 2023.
Top steel producer China’s factory activity shrank at a sharper pace in December as surging Covid-19 infections disrupted production and curbed demand after Beijing largely removed anti-virus curbs, a private sector survey showed.
Iron ore’s most-traded May contract on China’s Dalian Commodity Exchange fell as much as 1.5% to 842 yuan ($121.66) a tonne, surrendering some of its recent gains. It hit a more than six-month high of 867.50 yuan last week.
On the Singapore Exchange, the steelmaking ingredient’s benchmark February contract was down 0.9% at $116.20 a tonne, as of 0249 GMT.
Some people in Beijing, Shanghai and Wuhan braved the cold and a rise in Covid-19 infections to return to regular activity on Monday, but analysts expect continuing pressures ahead for the world’s second-biggest economy.
“Chinese Covid rates are going to have a substantial impact on the ability of factories to produce, on transport to deliver, builders to build and on finance companies to finance,” said John Meyer, an analyst at SP Angel.