China’s most-traded iron ore futures contract on the Dalian Commodity Exchange, for January 2023 delivery, plunged 4.1% to close at 643.5 yuan per tonne, the lowest level in more than three months.
Due to persistent losses in steel production, an increasing number of Chinese steelmakers are suspending production to avoid losses, Huatai Futures said in a note.
More Chinese regions are reporting Covid cases lately, which restrict social economic activities, it said. The ferrous industry chain has been in a contraction given the absence of a notable improvement in Covid situation and a meanful recovery in demand, it added.
China’s steel demand has remained sluggish even in the traditional busy season, the so-called Golden September and Silver October. Although the authorities have introduced a series of measures to support the struggling real estate sector, it will take more time for the sector to post a recovery, said analysts.
While infrastructure activities stays firm in October, as the winter season approaches, steel demand from infrastructure construction is expected to weaken, they said.