Iron ore futures dipped on Thursday, with the Dalian benchmark hitting a three-week low, as hopes faded for China to relax its stringent zero-Covid policy, while waning demand for the steelmaking ingredient dragged spot prices to an 11-month low.

Signals that Beijing will stick with its draconian measures to control Covid outbreaks after a pivotal Communist Party congress beginning Oct. 16 weighed on futures markets.

Market participants are closely watching how China will address challenges facing its economy, including a downturn in the property sector.

Ahead of the party meeting, the world's top steel producer ramped up Covid testing, extended quarantine times and closed some public spaces, as infections rose.

According to reports, mills in Hebei, China's top steel-producing province were asked to cut sintering operations by as much as 50 per cent to improve air quality during the meeting.

The most-traded January iron ore on China's Dalian Commodity Exchange fell as much as 1.7 per cent to 701.50 yuan ($97.75) a tonne, its lowest since Sept. 22.

On the Singapore Exchange, benchmark November iron ore dropped 0.9 per cent to $92.95 a tonne.

Spot 62 per cent-grade iron ore settled at $95.50 a tonne on Wednesday, SteelHome consultancy data showed , the weakest since November 2021.

Other steelmaking ingredients also remained under pressure. Dalian coking coal and coke slipped 0.1 per cent and 0.2 per cent, respectively.

Ferrous metals on the Shanghai Futures Exchange were somewhat supported. Rebar dipped 0.1 per cent, while both hot-rolled coil and wire rod gained 0.2 per cent, and stainless steel climbed 0.5 per cent.

"We should not be overly pessimistic about finished products," Huatai Futures analysts said in a note, pointing out that reduced steel production could eventually help prop up prices.

"In the short term, we will be dominated by macroeconomic factors and increased uncertainties...(but will) maintain a relatively neutral view," they said.

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