BEIJING: Chinese iron ore futures fell more than 4% on Thursday as downstream demand remained muted, while investors fretted over cues that the world’s second-largest economy is contracting in the second quarter amid the COVID-fuelled chaos.

China is facing bigger economic difficulties than in 2020, with some indicators started to weaken sharply since March, Premier Li Keqiang said at a national meeting on Wednesday, adding that the country should strive to achieve reasonable growth in the second quarter. “As steel mills’ profits are relatively low and with expectations of annual output controls, there’s limited room for further increase of molten iron production,” analysts with GF Futures wrote in a note. GF Futures expected ferrous prices mainly driven by steel products demand in the next term, and iron ore prices could continue to fluctuate before consumption improves.

The most-traded iron ore futures on the Dalian Commodity Exchange for September delivery fell as much as 4.1% to 806 yuan ($119.99) a tonne, the lowest since May 19. They were down 2.3% at 821 yuan a tonne, as of 0330 GMT.

Dalian coking coal prices slipped 1.6% to 2,451 yuan a tonne and coke futures dipped 1% to 3,229 yuan per tonne. Construction material steel rebar on the Shanghai Futures Exchange, for October delivery, was flat at 4,498 yuan a tonne.

Futures of hot-rolled coils, used in the manufacturing sector, edged down 0.2% to 4,627 yuan per tonne. The June delivery for Shanghai stainless steel faltered 0.4% to 18,530 yuan a tonne.