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Iron ore futures in Dalian and Singapore fell on Thursday as investors refocused on the gloomy outlook for Chinese demand after the government’s rhetoric on economic stimulus faded.

Concerns remained over the COVID-19 blocks in China, the world’s top steel producer, and their impact on demand for steel products and raw materials, despite repeated government promises to support the struggling economy.

The southern megacity of Shenzhen has vowed to stem a slowly spreading epidemic, while the authorities stick to China’s unique ‘zero-COVID’ policy.

The risks associated with the lockouts prompted the Asian Development Bank to cut China’s economic growth forecast for this year by one percentage point to 4.0%.

Due to persistently weak demand, the Chinese iron ore market is likely to be ‘overloaded’ in the second half of the year. Stockpiles at Chinese ports have steadily increased over the past three weeks, reaching a seven-week high of 130.6 million tonnes, and may accumulate further.

Steel mills have reduced production in recent weeks, putting plants into maintenance earlier than usual due to tight margins.