Chinese iron ore futures dropped up to 7% on Tuesday to touch their lowest in nearly two months, fuelled by concerns of higher interest rates and still-stagnant demand at home.
The U.S. Federal Reserve approved half-a-point interest rate hike last week, and said could stick to that for the next two to three meetings and then assess how the economy and inflation are responding before deciding whether further rises are needed.
“That has led to significant decline in commodities prices denominated in U.S. dollars such as iron ore,” GF Futures analysts wrote in a note.
Meanwhile, thin profit margins at steel producers, and overall steel output controls have curbed production increases and dented demand for steelmaking ingredients, said the note.
The most-active iron ore futures on China’s Dalian Commodity Exchange DCIOcv1, for September delivery, plunged as much as 7% to 756 yuan ($112.71) per tonne, the lowest since March 16.
They ended 4.1% lower at 779 yuan a tonne, extending losses to a third day.
On the Singapore exchange, the most-traded June iron ore contract SZZFM2 fell 3.1% to $123.45 a tonne.
Dalian coking coal futures DJMcv1 slipped 2.1% to 2,610 yuan a tonne and coke prices DCJcv1 fell 1.9% to 3,343 yuan per tonne.
Steel prices on the Shanghai Futures Exchange also declined, with construction material rebar SRBcv1 for October delivery down 1.5% to 4,607 yuan a tonne and hot-rolled coils SHHCcv1 faltering 1.7% to 4,698 yuan per tonne.
The June contract of stainless steel on the Shanghai bourse SHSScv1 shed 1.4% to 18,840 yuan a tonne.
China’s central bank said on Monday it would step up support for the slowing economy, while closely watching domestic inflation and monitoring policy adjustments by developed economies.