Dalian and Singapore iron-ore futures fell on Tuesday, sharply reversing gains made earlier in the session, after a spokesperson for China's state planner said the country would keep reducing steel output this year.
Adding to concerns over demand prospects for the key steelmaking raw material, China's steel production hub Tangshan implemented another round of Covid-19 lockdowns in four districts for at least three days from Tuesday, the local government said in a statement.
The most-traded September iron-ore on China's the Dalian Commodity Exchange ended daytime trade 3.3% lower at 887 yuan ($139.18) a tonne, after touching a two-week high of 942 yuan earlier in the session.
On the Singapore Exchange, the most-active May contract was down 2.3% at $151.35 a tonne, as of 07:05 GMT.
Top steel producer China will reduce crude steel output this year, after slashing production in 2021 in line with its goal to control carbon emissions, said a spokeswoman for China's state planner, the National Development and Reform Commission.
Expectations for additional policy support for the world's second-largest economy, which faces risks of a sharp slowdown due to the lockdowns and headwinds brought on by the Ukraine war, have pushed Dalian iron-ore prices up by more than 30% this year.
However, the timing and extent of the anticipated additional stimulus measures remain uncertain. Chinese authorities are walking a tight rope as they try to stimulate growth without endangering price stability.
"It remains to be seen how extensive the Chinese policy response will be," J.P. Morgan economists wrote in a note.
"Slower Chinese growth is expected to linger into 3Q before rebounding, raising the risk of near-term spillovers to regional trading partners and commodity exporters," they said.
Construction steel rebar on the Shanghai Futures Exchange slipped 0.4%, while hot-rolled coil SHHCcv1 ended flat. Stainless steel climbed 3%.
Dalian coking coal slid 4.4% and coke shed 3.2%.