MANILA: Iron ore futures slumped on Wednesday, with the Dalian benchmark contract hitting its lowest in two weeks, as intensified COVID-19 curbs in China and signals that its draconian zero-case approach will continue weighed on sentiment.

Shanghai and other big Chinese cities, including Shenzhen, have ramped up testing for Covid-19 as infections rose following this month’s Golden Week holidays and ahead of the crucial Communist Party congress beginning Oct. 16.

Speculations that top steel producer and iron ore consumer China would relax its zero-Covid policy after the congress had recently helped push iron ore and steel prices higher. But state-controlled People’s Daily, in a commentary on Tuesday, urged China to stick with the policy, as it warned a large-scale rebound in cases will have “a serious impact on economic and social development.”

China’s strict zero-Covid rules have caused a sharp slowdown in the world’s second-largest economy, adding to the gloomy global outlook as recession risks heightened especially in Europe.

The most-traded January iron ore on China’s Dalian Commodity Exchange fell as much as 3.3% to 706 yuan ($98.35) a tonne in early trade, its weakest since Sept. 26. On the Singapore Exchange, benchmark November iron ore shed 1.3% to $93.35 a tonne.

“The epidemic situation in many places in China has been severe, and the tone of ‘dynamic clearing’ has remained unchanged,” Sinosteel Futures analysts said in a note.

Other steelmaking ingredients also tumbled, with Dalian coking coal and coke down 3.3% and 4%, respectively, as of 0303 GMT. Rebar on the Shanghai Futures Exchange fell 2.5%, hot-rolled coil dropped 2%, and stainless steel slipped 0.6%. Hebei, China’s top steel-producing province, will limit output for one week from Oct 14.