Exchange prices for iron ore and steel fell sharply in morning trading as investors grew concerned about falling demand due to the spread of a new wave of coronavirus in China and the prospect of tough measures from the Chinese government to combat the pandemic.
The most actively traded September iron ore futures on the Dalian Commodity Exchange fell 11% during trading on Monday to 786 yuan (about $120) per ton. On the Singapore Exchange, iron ore contracts fell by 6.2% to $141.4 per ton, according to Dow Jones Newswires.
The price of the most actively traded October contracts for the supply of steel rebar on the Shanghai Futures Exchange (Shanghai Futures Exchange) fell by 3.2% to 4,857 yuan per ton.
"Increasing risks associated with a rise in viral infections call for caution," said Yep Jun Rong, market strategist at IG Singapore.
On Sunday, Chinese authorities ordered a mandatory coronavirus testing campaign in Beijing's Chaoyang District and imposed some movement restrictions in the city due to a surge in COVID-19 cases, local newspaper Beijing Daily reported.
“Prospects in the near future look unreliable due to expectations of even more disease detection, and the impact on economic conditions may be longer. This is enough to trigger a sell-off in the iron ore market due to demand-side issues,” Rong added.
Meanwhile, in Beijing, they still cannot decide on a reduction in iron ore production. As the Director General of the Department of Ecology and Environment of the People's Republic of China said at a conference in Beijing on Saturday, China needs to introduce acceptable controls on metal mining.
