Iron ore slides as Covid delays recovery
Seaborne iron ore prices have inched lower over Christmas amid quiet trading and an uncertain short-term outlook in China. While a strong recovery is expected, it has been delayed by rampant Covid infections.
The Kallanish KORE 62% Fe index slipped $0.41/t on Monday to $112.56/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index dipped $0.35/t to $126.19/dmt cfr, and the KORE 58% Fe index fell $0.36/t to $97.64/dmt cfr.
China’s surging Covid crisis has wiped out expectations ahead of the Lunar New Year. Active government policy is still supporting hopes for a rebound in steel demand later in the year, but the short-term disruption from Covid is expected to be significant.
After a period of stabilising production, more steelmakers are now lowering output and sending workers home early ahead of the Lunar New Year holidays. Steel mills in Anhui, in particular, have been announcing production cutbacks in the last week as there is no sign of restocking ahead of the holidays and Covid absences are already disrupting workforces.
If there is significant movement of people around the Lunar New Year, and there is now no policy preventing this, then the current wave of infections could be extended beyond the end of January. Mass infection and the tail end of the current wave will have to come before the long-awaited recovery in steel demand.
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