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Iron ore price falls on surging covid cases in China

Concerns over near-term economic activity resurfaced with China fighting numerous covid-19 flare-ups. (Stock Image)

Iron ore prices fell on Monday, as fresh covid-19 flare-ups in the world’s top steelmaker China dented demand outlook, while expectations of rising supplies after India’s decision to scrap export taxes on low-grade iron ore also weighed on sentiment.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $96.25 a tonne Monday morning, down 2.4%.

The most-traded January iron ore on China’s Dalian Commodity Exchange slid as much as 2.6% but pared losses to close at 745.5 yuan ($104.10) a tonne.

Concerns over near-term economic activity resurfaced with China fighting numerous covid-19 flare-ups. For Sunday, it reported 26,824 new local cases, nearing April’s peaks. It also recorded two deaths in Beijing.

“Ferrous futures are all dragged down by the worsening covid situation, and the prices are likely under downward pressure as it seems to last,” a Chinese iron ore trader said.

Chinese steel benchmarks and other steelmaking inputs also reversed gains on Monday.

India scrapped export taxes on low-grade iron ore and on some intermediate steel products beginning Saturday, after months of complaints from miners and steel makers about loss of foreign sales opportunities.

India exported 24.79 million tonnes of iron ore lumps and fines last year and shipped out 10.79 million tonnes of iron ore pellets, for which the government has now rescinded all duties, according to Atilla Widnell, managing director at Navigate Commodities.

“Indian exporters will find some buyers, predominantly in China, who will be eager to utilize low-grade iron ore fines and lumps in a compressed steel margin environment,” Widnell said.

(With files from Reuters)

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