China iron ore futures drop on worries over local Omicron cases

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Benchmark iron ore futures in China fell 2% on Monday, hit by concerns of disruptions to production and transportation in downstream sectors, after the country reported cases of the Omicron variant of the coronavirus over the weekend.

The northern coastal city of Tianjin has tightened exit controls after detecting local Omicron cases. The central Henan province also reported two local Omicron cases on the same transmission chain.

“The Tianjin outbreak over the weekend may provide some immediate downside shocks to prices should infection rates escalate and additional lockdown be imposed,” said Atilla Widnell, managing director at Navigate Commodities, Singapore.

The most traded iron ore futures on the Dalian Commodity Exchange, for May delivery, dropped 2% to 700 yuan ($109.85) per tonne by close.

Spot prices of iron ore with 62% iron content for delivery to China, meanwhile, increased $1 to $128.5 per tonne on Friday, according to SteelHome consultancy.

“Looking further forward, the market looks well supported by sentiment around a post-Beijing Winter Olympics, partial stimulus-fuelled steel demand recovery,” Atilla added.

Dalian coking coal futures edged 0.9% higher to 2,286 yuan a tonne and coke prices ended up 1.2% at 3,179 yuan per tonne.

Steel prices on the Shanghai Futures Exchange were mixed.

Construction used steel rebar rose 0.1% to 4,492 yuan per tonne while hot rolled coils, used in the manufacturing sector, slipped 0.3% to 4,632 yuan a tonne.

Shanghai stainless steel futures, for February delivery, jumped 3.4% to 17,400 yuan per tonne, boosted by robust nickel prices.

Source: Reuters

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