China’s iron ore and steel futures dipped on Tuesday, as concerns about the country’s persistent zero-COVID policy and ailing property sector keeping demand subdued outweighed news about a plan to relax the country’s border restrictions.

Caution also prevailed ahead of an expected hefty interest rate hike by the U.S. Federal Reserve this week.

The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 3.1% lower at 696 yuan ($99.24) a tonne.

Rebar on the Shanghai Futures Exchange fell 1.5%, while hot-rolled coil shed 2%.

“Rolling regional lockdowns under the zero-COVID policy represent a continuing risk for drag, and the housing market remains substantially weakened,” J.P.Morgan analysts said in a note.

Beijing issued draft rules aimed at making it easier for some foreigners to enter China for visits to tourism sites along its border – following months of border shutdown due to the pandemic.

China also reported on Tuesday a lower number of new COVID-19 cases, with Beijing reporting no local cases for the fourth consecutive day.

Iron ore’s benchmark October contract on the Singapore Exchange reversed early gains, and was down 0.9% at $96.20 a tonne, as of 0709 GMT.

Dalian coking coal dropped 1.1%, also pulling back, while coke trimmed its gains to 1%. Shanghai stainless steel slipped 0.3%.

“Iron ore has good short-term fundamentals and prices are supported, but the demand for finished (steel) products is not good,” analysts at Zhongzhou Futures said in a note.

Hopes also waned for additional policy support in the near term to shore up China’s economy that has been hit hard by COVID-19 curbs and property sector downturn.

China made a tough call to hold its benchmark lending rates steady on Tuesday, balancing the need to support economic growth with keeping yuan depreciation in check.

Source: Reuters