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Dalian iron ore set for first weekly fall in 5 on China demand woes

Dalian iron ore was set on Friday for its first weekly loss in five, dragged down by worries about top steel producer China’s stringent zero-COVID rules and restrictions ahead of the ruling Communist Party Congress.

Prices of the steelmaking ingredient, however, were supported in Singapore after the People’s Bank of China signalled yet again stronger support for the economy.

The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 0.6% lower at 702.50 yuan ($97.93) a tonne.

On the Singapore Exchange, benchmark November iron ore SZZFX2 was up 1.5% at $93.40 a tonne, as of 0702 GMT.

Ahead of the once-in-five-years congress beginning on Sunday, Beijing reiterated the need for a zero-tolerance approach to COVID-19, dashing hopes of an immediate relaxation of a policy that has slowed down the economy.

Sintering curbs in top steel-producing Hebei province aimed at improving air quality during the meeting added to the overall subdued mood.

Iron ore prices are on track to end 2022 at their lowest in last three or four years and will probably languish next year as well, with China and Europe cutting steel output, while pressure mounts from additional supply.

Spot 62%-grade iron ore tumbled to an 11-month low of $95.50 a tonne this week, SteelHome consultancy data showed SH-CCN-IRNOR62, as depressed steel margins also weighed on sentiment.

“Steel mills continue to struggle with negative margins and production curbs,” ANZ commodity strategists said in a note.

Ferrous metals, however, advanced, with rebar SRBcv1 on the Shanghai Futures Exchange up 0.4%, wire rod SWRcv1 up 0.6% and hot rolled coil SHHCcv1 up 0.1%.

Stainless steel SHSScv1 hit a one-month high amid concerns about tightening supply of raw material nickel ore.

Other steelmaking inputs also rose, with Dalian coking coal DJMcv1 and coke DCJcv1 gaining 1.2% and 1.3%, respectively.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)

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