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Iron ore price back below $100 on clouded China demand outlook

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The iron ore price dropped on Thursday, as investors shifted their focus back to the gloomy China demand outlook after a short-lived boost from the latest government rhetoric on economic stimulus.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $96.71 a tonne Thursday morning, down 1.9%.

The most-traded iron ore contract, for September delivery on China’s Dalian Commodity Exchange ended daytime trade 0.3% down at 657 yuan ($97.15) a tonne, after earlier touching 646.50 yuan.

Concerns remain over covid-19 lockdowns in China and their impact on demand for steel products and raw materials despite the government’s often-repeated pledge of policy support for the struggling economy.

The southern megacity of Shenzhen vowed to curb a slowly spreading outbreak, as authorities adhere to China’s unique “zero-covid” policy.

Risks from lockdowns have prompted the Asian Development Bank to lower its economic growth forecast for China this year by 1 percentage point, to 4.0%.

China’s iron ore market will likely be “oversupplied” in the second half of the year, Zhongzhou Futures analysts said in a note.

Portside iron ore inventory in China rose steadily over the last three weeks to hit a seven-week high of 130.6 million tonnes, SteelHome consultancy data showed, and analysts said stocks might pile up further.

Steel mills have reduced output recently, putting their facilities under maintenance earlier than usual due to depressed margins.

(With files from Reuters)