Dalian and Singapore iron ore futures dropped on Tuesday on persistent concerns about weak demand in China, with the state planner’s announcement of a plan to build more roads offering little relief to flagging markets.
The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange dropped up to 4.7% to 709 yuan ($105.38) a tonne, its lowest since July 6. It was down 3.5% at 718 yuan, as of 0330 GMT.
On the Singapore Exchange, the steelmaking ingredient’s front-month August contract SZZFQ2 was down 2.4% at $107.40 a tonne, after earlier falling to $105.80, its weakest level this year.
China aims to build a total of 461,000 km (286,450 miles) of national highway by 2035, compared with 382,000 km by the end of 2021, the state planner said on Tuesday, doubling down on infrastructure support to revive the economy.
Monday’s data showing a faster-than-expected rise in new bank lending in China in June, partly due to support for infrastructure spending, failed to perk up ferrous futures markets in the world’s biggest steel producer.
Beijing was reportedly considering allowing local governments to sell 1.5 trillion yuan ($220 billion) of special bonds in the second half of this year to further boost infrastructure funding.
But worries about recurring COVID-19 curbs and weak profitability at steel mills in China continued to outweigh reports of a massive stimulus package and previous pledges of policy support from Beijing.
“It is still unclear when China will start to pivot to living with COVID-19, and until it does, the potential for any stimulus ramp to be disrupted and multiplier effects impeded by restrictions remains,” said National Australia Bank economist Tapas Strickland.
Construction steel rebar on the Shanghai Futures Exchange fell 2.2%, hot-rolled coil shed 2% and stainless steel slipped 0.4%.
Dalian coking coal dropped 2.1% and coke DCJcv1 slumped 3.2%.
