Iron ore prices fell on Friday, with the Singapore benchmark headed to a weekly loss on renewed concerns over demand in China, where fresh COVID-19 alerts threaten to derail the economy’s reopening and steel margins have come under pressure.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended daytime trading 1.7% lower at 914.50 yuan ($136.83) a tonne.

On the Singapore Exchange, the steelmaking ingredient’s most-active July contract dropped 1.9% to $139 a tonne by 0706 GMT, with a weekly decline of 2.6%.

China’s commercial hub of Shanghai faces an unexpected round of mass COVID testing this weekend, following the discovery of a few cases in the community, just 10 days after a city-wide lockdown that hurt businesses was lifted.

Lockdowns in China, which has a tough zero-COVID policy, have battered the world’s second-largest economy and biggest steel producer.

“China remains a big source of uncertainty for global growth,” J.P.Morgan analysts said in a note. While the economy’s reopening has led to a surge in China’s exports in May, it “also raises the risk that cases re-emerge”.

However, spot iron ore in China traded higher this week, hitting a seven-week peak on Thursday at $148 a tonne, SteelHome consultancy data showed, as short-term demand picked up.

China’s iron ore imports rose 3% in May from a year earlier, data on Thursday showed, after disruptions to shipments by major suppliers eased.

The country ramped up its purchases – despite weak profits at steel mills – also because of the easing of COVID-related curbs and Beijing’s stimulus support for the struggling economy.

Other steelmaking ingredients were also under pressure, with Dalian coking coal DJMcv1 down 1.6% and Dalian coke falling 1%.

Construction steel rebar on the Shanghai Futures Exchange SRBcv1 was steady, while hot-rolled coil edged up 0.2% and stainless steel gained 0.4%.

Source: Reuters