SINGAPORE: Benchmark Dalian and Singapore iron ore futures fell on Monday, dragged down by improving near-term supply of the steelmaking ingredient and signs of continuing economic weakness in top steel producer China.

The drop came despite a surprise easing of monetary policy by the Chinese central bank and also weighed on other Dalian steelmaking inputs and steel futures in Shanghai.

Iron ore’s most-traded May contract on China’s Dalian Commodity Exchange ended daytime trading 2.4% lower at 705 yuan ($111.12) a tonne, near a session low of 700 yuan, its lowest since Jan. 10.

On the Singapore Exchange, iron ore’s most-active February contract was down 1.7% at $124.55 a tonne by 0725 GMT.

China’s central bank cut the borrowing costs of its medium-term loans for the first time since April 2020, suggesting an intensifying economic slowdown, even as the world’s second-biggest economy posted a faster-than-expected annual growth of 4% in the last quarter of 2021.

“The lagged economic data and PBOC rate cut were already priced in, in our opinion,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.

The better-than-expected economic expansion, however, was China’s slowest growth pace in one-and-a-half years, and some analysts said the weakness will likely persist partly due to ongoing COVID-19 restrictions.

Iron ore was due for a correction following recent rallies, Widnell said, adding the improving weather in key supplier Brazil and increased shipments from Australia could release some air from “overinflated” prices.

Spot iron ore for delivery to China scaled a three-month peak of $132.50 a tonne on Jan. 13, SteelHome consultancy data showed.

Construction steel rebar and hot-rolled coil on the Shanghai Futures Exchange both dropped 2%. Stainless steel slipped 0.7%.

China’s annual crude steel output dropped for the first time in six years in 2021 amid stepped-up efforts to contain emissions.

Dalian coking coal slumped 4.1% and coke tumbled 5.9%.