Iron ore drops in volatile session on China demand concerns

Iron ore futures on the Dalian and Singapore exchanges reversed initial gains and closed lower on Monday, pressured by concerns about demand for the steel ingredient in China due to the persistent zero Covid policy and the sector. troubled local real estate.

January’s top-traded iron ore on China’s Dalian Commodity Exchange ended trading down 1.4% at 705.50 yuan ($100.61) a tonne after rising 1.8% earlier in the year. session.

On the Singapore Stock Exchange, October benchmark iron ore fell 1.2% to $96.80 a tonne after rising to 2.4% in early trading.

Iron ore prices were initially supported by news of easing of Covid-19 restrictions in some areas of China, including the southwestern city of Chengdu.

But traders have been cautious, aware of the possible tightening of such restrictions ahead of the Communist Party congress next month, where President Xi Jinping is expected to secure a historic third term.

China is unlikely to lift its zero Covid policy “until at least the end of October” or after the party congress, StoneX senior metals analyst Natalie Scott-Gray said.

Rebar on the Shanghai Futures Exchange was flat on Monday, while hot-rolled coil was down 0.3%, also erasing early gains.

Stainless steel retreated 0.1%.

Fears of a global recession and the challenges facing China’s housing market have also kept investors on edge.