Iron ore slips as China rally loses momentum

Dalian and Singapore iron ore futures slipped on Tuesday in volatile trade, as traders tempered their optimism about prospects of top steel producer China moving further away from its stringent zero-COVID policy.

The most-traded iron ore for May delivery on China's Dalian Commodity Exchange TIO1! ended daytime trade 0.6% lower at 780 yuan ($111.62) a tonne.

Dalian iron ore hit its highest since June 14 on Monday at 799.50 yuan a tonne, as more Chinese cities cut back on lockdowns, quarantine rules and testing requirements, while authorities softened their tone on health risks.

On the Singapore Exchange, the steelmaking ingredient's benchmark January contract (SZZFF3) was down 0.3% at $108 a tonne, as of 0702 GMT, after a three-session advance.

China is set to announce a further easing of COVID-19 rules as early as Wednesday, Reuters reported citing sources, as Beijing tries to shore up the economy after restrictions curbed industrial activity and domestic demand.

"A more comprehensive re-opening though will likely have to wait until after the winter with March/April still favoured by analysts," said National Australia Bank economist Tapas Strickland.

Worries remain about potential spikes in coronavirus cases in China, especially during colder months and following the partial easing of COVID restrictions.

"Notwithstanding China pivot optimism, it is worth noting U.S. tech names continue to report production interruptions from operations in China and also uncertain demand," Strickland added.

Dalian coking coal NYMEX:ACT1! gained 0.4%, recovering from early dips, but coke (DCJcv1) fell 1.4%.

On the Shanghai Futures Exchange, rebar RBF1! slipped 0.6% and hot-rolled coil EHR1! shed 0.4%, while wire rod (SWRcv1) steadied. Stainless steel HRC1! rose 1.3%.

The United States and the European Union are weighing new tariffs on Chinese steel and aluminium as part of a bid to fight carbon emissions, Bloomberg News reported on Monday, citing people familiar with the matter.