SGX iron ore retreats on China's zero-COVID policy, Dalian traders defiant

3 weeks ago 26
Iron ore rallied relentlessly last week despite Chinese authorities saying the nation should unwaveringly stick to the zero-COVID policy and denying knowledge of a rumoured plan for border reopening by next year.

By Enrico Dela Cruz

Iron ore futures in Singapore retreated on Monday after a four-session rally, following China's renewed adherence to a strict COVID-containment approach, but the steelmaking ingredient's contracts on the Dalian Commodity Exchange stretched gains.

Top steel producer China reported its highest number of new infections in six months on Sunday, a day after health officials said they were sticking with strict coronavirus curbs.

Iron ore rallied relentlessly last week despite Chinese authorities saying the nation should unwaveringly stick to the zero-COVID policy and denying knowledge of a rumoured plan for border reopening by next year.

Benchmark December iron ore on the Singapore Exchange was down 1.6% at $84.60 a tonne, as of 0340 GMT, after a weekly rise of more than 8%.

But the Dalian exchange's most-traded January iron ore ended morning trade 1.5% higher at 658 yuan ($91.22) a tonne, up for a fifth session.

The "buy-on-rumour" bets continued despite weak fundamentals as Chinese steel mills have reportedly shut furnaces and hastened year-end maintenance amid weak demand.

Commodities broker Marex saw "psychological resistance" at 650 yuan for Dalian iron ore, and next at 673 yuan.

While China is sticking with the zero-COVID policy, authorities are seen making modest tweaks to managing the virus.

"Notions that China will pivot to living with COVID in the new year are likely to remain given the significant economic cost of zero-COVID," said Tapas Strickland, head of market economics at National Australia Bank.

"Such an easing would more likely come after the winter given... the potential of a re-o...

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