Prices of commodities are decreasing as China gives no signal of easing the “zero-COVID” restrictions amid a new surge of outbreaks in the country.
According to Nikkei Asia, the price of iron ore futures dropped about $79 per tonne on the Singapore Exchange on November 1, down 15% from October. In addition, hot-rolled coil steel has declined below $483 per tonne for the first time in over two years.
The country accounts for about 70% of the iron ore international trade, which might reflect an economic indicator for the Chinese economy.
Official data a few days ago showed that China’s imports and exports were down last month due to the economic downturn.
China’s imports fell 0.7% in October, down from a 0.3% increase in September and below analysts’ expectations. Weakened domestic consumption hurt imports of soy, copper, and coal.
Data also showed that property investment fell 8% for the first nine months amid the ongoing real estate crisis.
Nikkei Asia cited a steel company saying, “Demand for materials like steel, which heavily depends on construction, has cooled further due to a lack of economic stimulus measures unveiled at the Communist Party congress.”
According to the World Steel Association, Chinese steel production decreased by 3.4% in the first three quarters due to shrinking demand.
In addition, China’s producer price index for October fell for the first time in two years, dropping 1.3% from a year ago. The index reflects the product prices that factories charge wholesalers.
China’s National Bureau of Statistics (NBS) said that the index partially reflects the falling commodity prices.
According to Reuters, prices in the coal mining and washing industry dropped 16.5%, while prices in rolling metal processing plunged 21.1% last month after declining 18.0% in September.