Thursday, June 16, 2022

Iron ore price down ahead of China’s central bank rate announcement

iron ore price

China’s central bank. (Stock Image) 

Iron ore prices fell on Tuesday as fresh covid-19 outbreaks in China clouded demand prospects in the world’s top steel producer.

Market focus has turned to the People’s Bank of China, which could cut the rate on its medium-term lending facility on Wednesday.
iron ore price

The most-traded September iron ore futures contract on China’s Dalian Commodity Exchange ended daytime trading 0.1% lower at 901.50 yuan ($134.11) a tonne, after earlier falling to 882 yuan, the lowest since May 31.

“The risk of further lockdowns remains high while the dynamic-zero covid-19 approach remains in place,” Fitch Ratings said in a statement.

Fitch Ratings cut its economic growth forecast for China this year to 3.7%, from 4.8%, to reflect the impact on the activity of recent lockdown measures.

Still, most research reports remain fairly optimistic about the longer-term outlook for iron ore, despite “headwinds from Shanghai’s partial return to lockdown,” according to analysts in an emailed Morgan Stanley report headed by Marius Van Straaten.

It is projecting a deficit market on a full-year basis, and “a robust recovery in China’s steel production on strong infrastructure spending should drive more price upside” by the third quarter.

(With files from Bloomberg and Reuters)

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