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Iron ore futures were mixed on Wednesday, with the Singapore benchmark price retreating from a five-month high, as traders assessed demand prospects in the wake of China relaxing COVID curbs and a looming global recession.
The most-traded May iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 0.7% higher at 835.50 yuan ($119.87) a tonne, after earlier touching 838.50 yuan, its highest since Dec. 16.
On the Singapore Exchange, the steelmaking ingredient’s most-active January contract SZZFF3 was down 0.1% at $113.35 a tonne, as of 0700 GMT. It vaulted on Tuesday to the highest since late July above $114.
China announced on Monday that starting Jan. 8 inbound travellers would no longer have to go into quarantine and it would also resume issuing visas for mainland residents to travel overseas.
Top steel producer and iron ore consumer China’s strict COVID containment policy has curbed industrial activity and domestic demand, and last month ignited public unrest.
“The positive impact of these easing measures should go beyond international travellers,” said ING Greater China Chief Economist Iris Pang.
“This should increase mobility within the country from the first quarter of 2023, and therefore consumption as well.”
However, spikes in China’s COVID cases and the holiday season that runs until after next month’s Spring Festival could curb iron ore and steel prices in the near term, analysts said.
China’s steel exports, meanwhile, also face downside risks from an expected economic downturn in the United States and Europe.
“There will be fall in external demand. Export-related activities, including manufacturing, should slow, which would derail the recovery of the Chinese economy,” Pang said.
Rebar on the Shanghai Futures Exchange SRBcv1 edged up 0.3% and hot-rolled coil SHHCcv1 gained 0.1%, while wire rod SWRcv1 slipped 0.4%. Stainless steel SHSScv1 added 0.4%.
Other Dalian steelmaking inputs also retreated, with coking coal DJMcv1 and coke DCJcv1 down 1.4% and 2%, respectively.