Dalian iron ore edged higher on Thursday, buoyed by hopes of improved steel demand in China in 2023, as Beijing seeks to ensure economic growth, even as local COVID outbreaks are curbing industrial activity and consumer demand.
Top global steel producer China will implement policy measures to support the economy and aim for an improvement in growth in early 2023, state media on Wednesday quoted the cabinet as saying.
Last week, Chinese leaders pledged to focus on stabilising the economy in 2023 and step up policy adjustments.
Iron ore’s benchmark May contract on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 0.7% higher at 817.50 yuan ($117.14) a tonne.
But worries about the economic impact of COVID-19 outbreaks in the near term weighed on the steelmaking ingredient’s benchmark January contract on the Singapore Exchange, which was down 1.2% at $110.90 a tonne as of 0716 GMT.
“The economy is struggling to recover from rising COVID cases,” said Iris Pang, ING Greater China chief economist. “We expect that economic recovery from now until March will be bumpy.”
A Shanghai hospital has told its staff to prepare for a “tragic battle” with COVID-19 as it expects half of the city’s 25 million people to get infected by the end of the year.
Other Dalian steelmaking inputs fell, with coking coal DJMcv1 and coke DCJcv1 down 2.2% and 3%, respectively, surrendering gains despite the absence of progress regarding trade blockages that involve coal shipments from Australia, among other commodities.
Steel benchmarks were subdued, with rebar on the Shanghai Futures Exchange SRBcv1 down 0.4% and wire rod SWRcv1 slipping 0.2%, while hot-rolled coil SHHCcv1 edged up 0.1%. Stainless steel SHSScv1 dipped 0.7%.