MANILA: Dalian iron ore futures slumped by their 11% limit on Monday, while those in Singapore dropped as much as 8%, as fears grew about a collapse of steel consumption in top user China.

Traders fretted about market fundamentals amid China’s struggle to contain recent COVID-19 outbreaks, a slowdown in construction activity during the rainy season, rising steel inventory due to sluggish demand, and weak profits at mills.

The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange ended daytime trade 11% lower at 746 yuan ($111.60) a tonne, its lowest since March 16. On the Singapore Exchange, the front-month July contract for the steelmaking ingredient slumped as much as 8% to $110.40 a tonne.

“Heavily subdued, COVID-afflicted domestic steel consumption” continued to weigh on China’s ferrous complex, said Atilla Widnell, managing director at Navigate Commodities in Singapore. China’s strict zero-COVID policy of constantly monitoring, testing and isolating its citizens to prevent the spread of the coronavirus has battered much of the country’s economy.

The mainland reported 109 new coronavirus cases for June 19, compared with 159 a day earlier. “Steel prices have dropped to 16-month lows as inventory rises,” analysts at Westpac said in a note. That adds to the downward pressure on iron ore markets stemming from lockdowns in China and steel producers idling plants due to slumping margins, they said.

Traders hoping for immediate policy measures to shore up the struggling economy suffered disappointment as China stood pat on its benchmark lending rates for corporate and household loans, as expected, on Monday. Construction steel rebar on the Shanghai Futures Exchange fell 6%, while hot-rolled coil dipped 6.5%. Stainless steel bucked the trend, rising 1.3%. Dalian coking coal shed 10.6% and coke sank 11.5%.