Iron ore price tumbled on Wednesday to its lowest since the first week of December, as worries grew about an oversupply of steel in China.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $108.98 a tonne, down almost 6% from Tuesday’s closing.
“Markets are particularly worried that demand growth expectations linked to China’s pledge to boost infrastructure investment may not materialise, especially with China’s zero-COVID policy still in play,” said Commonwealth Bank of Australia analyst Vivek Dhar.
Worries remain about renewed restrictions dampening overall domestic demand, as China continues to detect new coronavirus cases day after day.
Disruptions to construction activity caused by heavy rains in some parts of China have also led to the piling up of steel inventory, prompting steel mills to idle blast furnaces to cut losses.
“Doubts over China’s future steel demand growth has meant that markets could no longer ignore current market conditions of oversupply in China’s steel sector,” Dhar said.
(With files from Reuters)