China ferrous futures fall as Xi stresses zero-COVID stance
Iron ore futures and most ferrous metals in top steel producer China fell on Monday, extending losses a day after President Xi Jinping reiterated the effectiveness of his zero-COVID policy at the opening of the ruling Communist Party Congress.
Xi confirmed what the party’s official newspaper stressed three times last week – that the policy was correct – as he said China “achieved major positive results in the overall prevention and control of the epidemic”.
Although somehow anticipated, his remarks still weighed on sentiment as some traders were still clinging to hope recently for looser COVID-19 rules.
Xi’s zero-tolerance approach to COVID-19 has caused supply chain disruptions, dampened demand and slowed China’s economy dramatically.
The most-traded January iron ore on the Dalian Commodity Exchange DCIOcv1 ended daytime trade 2% lower at 686.50 yuan a tonne, after hitting its weakest since Sept. 8 at 680.50 yuan earlier in the session.
Benchmark November iron ore on the Singapore Exchange SZZFX2 also shed 2% to $91.90 a tonne, as of 0723 GMT.
China’s daily count of new coronavirus cases has doubled since September, hardening the resolve of authorities to quickly eliminate outbreaks.
“Any last embers of hope or sentiment that China might reverse out of this economic growth-suppressing strategy feel like they’ve now been well and truly stamped out,” said Navigate Commodities Managing Director Atilla Widnell.
Spot 62%-grade iron ore bound for China hit an 11-month low of $95.50 a tonne last week, SteelHome consultancy data showed, amid COVID-induced restrictions and sintering curbs aimed at improving air quality during the week-long congress. SH-CCN-IRNOR62
On the Shanghai Futures Exchange, rebar SRBcv1 and hot-rolled coil SHHCcv1 fell 1.7% and 1.5%, respectively, while wire rod SWRcv1 dropped 1.6%. Stainless steel SHSScv1 gained 1.8%.
Other steelmaking inputs also remained under pressure, with Dalian coking coal DJMcv1 down 3.3% and coke DCJcv1 slumping 4.3%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips)