By Enrico Dela Cruz, July 11 (Reuters) - Benchmark
iron ore prices in Asia fell on Monday on growing fears of weakening demand for
the raw material in top steel producer China, where multiple cities are
enforcing fresh COVID-19 curbs.
The most-traded iron ore, for September delivery, on China's Dalian
Commodity Exchange DCIOcv1 ended
morning trade 4.5% lower at 731.50 yuan ($109.03) a tonne, after earlier
touching 723.50 yuan, its lowest since July 6.
On the Singapore Exchange, the steelmaking ingredient's
front-month August contract SZZFQ2 slumped as much as 4.1% to $108.25 a tonne,
also the weakest since July 6.
"Relentlessly negative COVID headlines out of Gansu,
Guangdong, Henan, Macau, Shanghai, and Zhejiang over the weekend will pour
ice-cold water over sentiment from Monday onwards," said Atilla Widnell,
managing director at Navigate Commodities in Singapore.
Local governments in China are adopting fresh curbs, from business halts to
lockdowns, to rein in new infections, with the commercial hub of Shanghai
bracing for another mass testing campaign after detecting the BA.5 Omicron
subvariant.
"China looks like it is losing its war against COVID with
naturally more transmissible subvariants now popping up faster than it can
stomp them out," Widnell said.
Increased iron ore shipments to China from top suppliers
Australia and Brazil also add to negative mood, he said.
That could push portside inventory of imported material higher,
after rising for a second consecutive week to 128.3 million tonnes, as of July
8, based on SteelHome consultancy data SH-TOT-IRONINV.
Demand for iron ore, meanwhile, is expected to remain weak as
Chinese steel mills scale back output while nursing losses from high
inventories and sluggish steel orders.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 tumbled
5%, hot-rolled coil SHHCcv1 dropped
4.7% and stainless steel SHSScv1 shed 1%.