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Iron ore futures dipped on Tuesday as rising COVID cases in the world’s top steelmaker China fanned demand concerns, though the country’s efforts to support the ailing property sector and low inventories lent some support.
The most-traded January iron ore on China’s Dalian Commodity Exchange edged 0.1% down to 738.5 yuan ($103.27) a tonne as of 0449 GMT.
On the Singapore Exchange, the benchmark December iron ore was down 0.1% at $95.3 a tonne.
China is fighting a nationwide spike in cases, with the capital city Beijing shutting parks and museums on Tuesday, after it warned that it was facing its most severe test of the COVID-19 pandemic.
Concerns that Beijing may reimpose strict pandemic curbs and that further restrictions could cause supply chain disruptions sent Asian shares down on Tuesday.
However, the losses were limited amid efforts by China’s regulators to support the property sector, according to ANZ Research.
Chinese regulators have told financial institutions to extend more support to property developers to stabilise lending to developers, including reasonable extensions of existing loans.
In addition to optimism that steel-intensive sectors such as construction and infrastructure will accelerate next year, there are some other bullish factors for iron ore and steel, such as low inventories.
Iron ore inventories at Chinese ports dropped to 135.45 million tonnes in the week to Nov. 18, from 136 million the previous week.
“Near-term sentiment is driven by COVID fears, but prices should be able to find supports from the market fundamentals,” a Chinese iron ore trader said.
“Many steel plants are sitting on low stockpiles (of iron ore) and will need to procure from the spot market.”
The most-active rebar contract on the Shanghai Futures Exchange advanced 1.2%, hot-rolled coil moved up 0.9%, wire rod climbed 1.3%, while stainless steel rose 2.6% up.
Dalian coking coal fell 1%, and coke nudged up 0.2%.