Iron ore prices fell on Wednesday amid concerns over Covid-19 restrictions and increasing the upcoming off-season sentiment for construction activity in China.
The benchmark value of 62% Fe imported into northern China was changing hands at $123.39 per tonne in afternoon trading, down 2.3 percent from Tuesday's close, according to Fastmarkets MB.
The top-traded iron ore contract for May delivery on China's Dalian Commodity Exchange ended day trading at 693.50 yuan ($108.84), down 0.4 percent.
China maintains a policy of zero tolerance for local cases of covid-19 and is moving quickly to suppress local outbreaks by imposing mobility restrictions.
"(Steel demand) is gradually transitioning from the peak season to the off-season cycle, and consumption is expected to gradually pull back from the previous month," Huatai Futures analysts wrote in a note. said.
Worldwide crude steel production fell to 143.3 million tons in November from a year earlier, but Chinese levels fell 22% to 69.3 million tons, according to data from the World Steel Association on Wednesday.
Caroline Bain, chief commodity economist at Capital Economics, said in a note that Chinese output fell 3.2% compared to last month, showing that output may stabilize at lower levels.
“While efforts to reduce emissions have explained much of the weakness in China's steel production lately, we think demand is also sluggish given the slowdown in China's construction and real estate sectors.” said.
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