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Iron ore price rises despite lockdown on China steel hub

Worker repairs mechanical parts in the production workshop in Tangshan city, Hebei Province, China. Stock image.

The iron ore price rose on Wednesday despite the decision by top steelmaking city Tangshan to implement a temporary lockdown.

The Tangshan government implemented the lockdown on Tuesday to avoid further cases of covid-19 as infections surged, the local government said in a statement.

“Although consumption for steel products are relatively sluggish, production is also falling,” analysts with Huatai Futures wrote in a note.

The situation of tight raw materials inventories has not been reversed yet, which could further sustain steel prices, analysts added.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $145.49 a tonne on Wednesday, up 1.4% compared to Tuesday’s closing.

Steelmaking ingredients on the Dalian Commodity Exchange were mixed after falling more than 3% during the night session, with benchmark iron ore edging up 0.4% to 823 yuan a tonne.

“Due to transportation disruptions, most steel mills face raw material shortages … and there’s even possibility for production halt,” said Huatai Futures, noting that iron ore demand will be dampened.

($1 = 6.3743 Chinese yuan renminbi)

(With files from Reuters)