The iron ore price fell to a two-week low on Thursday as traders reassessed demand prospects in China.
Iron ore and steel prices in China hit multi-month highs in January as markets rallied from early November on the back of Beijing’s stepped-up policy support for its ailing property sector and dismantling of strict covid-19 curbs.
Steel prices are “running strongly under the support of cost and positive expectations,” Huatai Futures analysts said in a note.
But analysts said the demand-side support for iron ore needed to be verified.
China’s imports and exports are facing an “extremely severe” environment due to rising risks of a global recession and slowing external demand, a government official said on Thursday.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $124.68 a tonne Thursday morning, down 2.2%.
The most-traded May iron ore on China’s Dalian Commodity Exchange ended daytime trade 3.3% lower at 841.50 yuan ($125.29) a tonne. It earlier hit 839 yuan, its weakest since Jan. 18.
“We believe more stimulus and infrastructure spending could be unveiled at the National People’s Congress in March, which is likely to boost demand for commodities further,” said ING commodities strategist Ewa Manthey.
However, analysts said Chinese regulators, who have warned against excessive iron ore price speculation, may step in to manage any potential upward pressure on commodity inflation.
(With files from Reuters)