The most-traded January iron ore contract on China’s Dalian Commodity Exchange ended daytime trade 5% lower at 682 yuan ($98.57) a tonne, having touched a one-week low of 680.50 yuan earlier in the session.
Steel prices also stretched losses after several Chinese cities, including Shenzhen and Dalian, escalated covid-19 restrictions to contain outbreaks.
Steel production in the key center of Tangshan will fall by more than 8 million tonnes in the second half due to plans to restrict output, Minmetals Futures said in a note on Tuesday. The hub produced about 75 million tonnes in the first six months, according to Mysteel.
Authorities in Tangshan, near Beijing, decided to cut production at a recent meeting, Mysteel said in a report last week. Major mill Angang Steel Co. has said it sees tough conditions persisting through the end of the year.
Chinese banks are facing losses as mortgage boycotts sweep the property sector, which is crucial to steel demand.
“A lack of growth in construction activity will keep steel demand weak in the short term,” analysts including Daniel Hynes at Australia & New Zealand Banking Group wrote in a note.
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(With files from Reuters and Bloomberg)