• Iron ore hits wobbles as China sticks to zero Covid strategy amid cases in steel city
  • Global steel production falls 5.7% YoY in February to 142.7Mt
  • Battery metals stocks prop up resources sector led by Sayona Mining

Momentum behind iron ore prices has been moving as smoothly as Elaine Benes cutting a rug after Covid cases in China’s steel city prompted a slide in futures below US$150/t.

It came one day after positive economic chatter out of the Chinese Communist Party sent prices higher prompting big buying for commodities yesterday led by a 5% gain for the world’s largest miner BHP (ASX:BHP).

China is continuing to stick with its Covid Zero policy for now, largely out of step with the rest of the world.

After virus cases were reported in Tangshan, one of China’s largest steel producing hubs, that has lifted concerns more lockdowns and restrictions on production could be issued.

“Further lockdowns in China weighed on sentiment across the metal markets,” ANZ head of Australian economics David Plank said.

“Liang Wannian, China’s top virus expert, said the country should stick with its strict zero-COVID strategy.

“This follows the lockdown of Tangshan City, a steel hub in China’s northern Hebei province. This saw iron ore futures fall amid concerns it would impact steel output in the region.

“Logistical issues due to the restrictions on travel are also hurting supply chain across the country.”

China imports around 80% of our iron ore and accounts for almost 60% of global steel production.

According to data from the World Steel Association overnight, steel output fell 5.7% year on year in February to 142.7 million tonnes.

That was impacted by big year on year falls in China (down 10% to 75Mt), which was expected given its directives to reduce pollution during the Beijing Winter Olympics, Brazil and the CIS states including Russia and Ukraine.

On the flip side production in India, regarded as a future growth market for steel, was up 6.6% year on year across January and February to 20.9Mt.

Iron ore miners were generally weak with BHP down 1.52%, Rio Tinto (ASX:RIO) off 0.67%, Champion Iron (ASX:CIA) slipping 2.99%, Mount Gibson (ASX:MGX) down 1.79% and FMG (ASX:FMG) falling 0.21% in early trade.

Materials fell 0.8% as gold miners also gave up yesterday’s gains.


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Battery metals stocks in favour

On the other hand battery metals were in favour, led by lithium company Sayona Mining (ASX:SYA), which is up a humble 66% over the past month alone.

The North American lithium hopeful, now valued at $1.4 billion, climbed 10.81% this morning, with rare earths play Australian Strategic Materials (ASX:ASM), fellow American lithium stock Ioneer (ASX:INR), and Argentine brine lithium explorer Lake Resources (ASX:LKE) also big gainers.

Outside the lithium space nickel miner Mincor (ASX:MCR) was up 1.3% this morning after announcing first ore at the Cassini nickel mine near Widgiemooltha, part of its Kambalda operations.

Cassini, where the Woodall decline was sunk 12 months ago, is the first new mine to open in the famous nickel district in decades.

“Mining the first development ore at our Cassini Operation is
another exciting milestone, particularly for the Cassini operations team,” Mincor MD David Southam said.

“Cassini is the first new nickel mine to be developed in the Kambalda region in many years, and it’s really exciting to see it coming to life.

“With first ore now delivered from both the Northern Operations and Cassini, we have significantly de-risked our pathway towards the resumption of nickel concentrate production in the next quarter.”

Nickel had a somewhat normal day of trade for the first time since its epic short squeeze earlier this month, avoiding the downward limit for the first time since trade resumed, closing 10.3% lower at US$28,159/t.


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