(Bloomberg) -- The worsening in Chinese demand conditions over the near term has sent iron ore prices into a tailspin, and the outlook for the rest of the year could be just as bleak.

Futures plunged on Monday on fears that the fast-spreading omicron strain of the virus has taken hold in Beijing, and that ever more areas of the country are threatened by the severe restrictions that have paralyzed the financial hub of Shanghai. Iron ore led losses but none of the other major industrial commodities were spared, with China’s crude markets potentially facing their biggest demand shock since the start of the pandemic.

Li Gao, a director at the environment ministry, told a conference in Beijing on Saturday that China needs to put reasonable controls on steel output. In practice, that means cutting production for a second year, as per the pledge from the government last week. Factor in the move to less-polluting methods of producing the alloy and that could mean that iron ore consumption has peaked.

Weak demand from the construction sector has already led to a pile-up in steel inventory during what should be one of the year’s main periods of activity. What will worry bulls is that Beijing’s willingness to reverse that with massive spending on public works seems to be in doubt.

In that vein, Capital Economics said in a note on Friday that it expects infrastructure stimulus to “merely provide a floor under prices as the government appears willing to tolerate slower growth in 2022.”

Today’s Events

(All times Beijing unless shown otherwise.)

  • EARNINGS: Tongwei

Today’s Chart

China is exporting unusually large volumes of metals, highlighting the precarious state of global supplies. Aluminum shipments from the world’s biggest producer rose to a record in the first quarter, while copper exports nearly doubled in March from the previous month. Zinc shipments also surged last month, and there are signs that steel exports will pick up.

On The Wire

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  • China’s Gold Stocks Slide After Metal Has Worst Week This Month
  • Steel Stocks Fall as Iron Ore Drops as Much as 12% in Singapore

The Week Ahead

Tuesday, April 26

  • China Offshore Wind Power Conference, Guangzhou, day 1
  • EARNINGS: Xinjiang Goldwind, Ganfeng Lithium, WH Group, Chalco

Wednesday, April 27

  • China industrial profits for March, 09:30
  • China Offshore Wind Power Conference, Guangzhou, day 2
  • EARNINGS: China Coal, Shenhua, BYD, Huayou Cobalt, Longi Green, Sinopec, Longyuan Power, China National Nuclear Power, Trina Solar, HKEX, Hitachi Construction

Thursday, April 28

  • Fortescue Metals quarterly production report
  • China Offshore Wind Power Conference, Guangzhou, day 3
  • EARNINGS: Gotion High-Tech, China Moly, China Oilfield Services, Jiangxi Copper, Anhui Conch, Baosteel, Cnooc, Sany Heavy, Komatsu, Caterpillar
  • Glencore quarterly production report

Friday, April 29

  • China Caixin factory PMI for April, 09:45
  • China weekly iron ore port stockpiles
  • Shanghai exchange weekly commodities inventory, ~15:30
  • EARNINGS: Tianqi Lithium, Yangtze Power, PetroChina, Maanshan Steel, JA Solar

Saturday, April 30

  • China official PMIs for April, 09:30
  • EARNINGS: CATL

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