Dalian iron ore fell in seesaw trade on Wednesday, as worries about future demand for the steelmaking ingredient in China outweighed reports of COVID-19 curbs being eased in some areas in the world’s top steel producer.

The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trading 1.8% lower at 898 yuan ($140.07) a tonne.

On the Singapore Exchange, iron ore’s most-active May contract also swung between losses and gains. It was up 0.2% at $151 a tonne by 0739 GMT.

“There was some initial disappointment in early trading to the unchanged loan prime rate,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.

China surprisingly kept its benchmark lending rates steady on Wednesday, with markets seeing the move as Beijing’s cautious approach to rolling out more easing measures as the economy slows due to COVID-19 lockdowns.

“However, thick and fast news flow on easing epidemic control measures in Jilin and Shandong provinces, and further mortgage and deposit rate cuts in a Beijing district have buoyed markets,” Widnell said.

Still, overall sentiment remained shaky as China has vowed to produce less crude steel this year than in 2021. Last year’s output was kept below the 2020 volume, in line with the country’s goal to reduce carbon emissions.

Also, several districts in Tangshan city – China’s steel production hub – have been placed again under lockdown tentatively for three days from Tuesday, highlighting the risks of a recurring outbreak.

And while traders expect more policy easing will be rolled out in the coming months, “the probability of introducing supplementary fiscal stimulus and more aggressive rate cuts remains low”, J.P.Morgan economists said in a note.

Construction steel rebar on the Shanghai Futures Exchange climbed 0.8%, while hot-rolled coil gained 0.4%. Stainless steel lost 1.7%.

Dalian coking coal DJMcv1 shed 4% and coke slumped 3.2%.

Source: Reuters