Iron ore price posts worst day in 9 months on slowing steel output

The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trade 3.5% lower at 795.5 yuan ($109.94) per metric ton, its worst day since October.

On the Singapore Exchange, the benchmark August iron ore was down 3.1% at $104.3 per metric ton, as of 0710 GMT. Earlier, the contract plunged as low as $104.1.

“Iron ore prices remained under pressure amid steel output curbs,” ANZ Research said in a note on Monday.

“Tangshan has ordered steel mills to curb output for all of July to combat worsening air quality. Extreme heat in the north of the country may also lead to slowing construction activity.”

Temperatures are forecast to hit over 40 degrees Celsius in some regions across China, Westpac said in a separate note.

The decline in futures prices can also be attributed to last weekend’s purge of leadership at the People’s Bank of China (PBoC) and a lack of updates on China’s stimulus, Westpac added.

China’s factory gate prices fell at the fastest pace in over seven-and-a-half years in June and missed expectations, while consumer prices were unchanged as a faltering post-Covid recovery weighed on demand.

Still, China will keep promoting low-carbon development in the steel industry, China’s Ministry of Ecology and Environment official Liu Bingjiang said at an industry conference on Saturday.

Steel benchmarks on the Shanghai Futures Exchange slipped. The most-active rebar contract on the Shanghai Futures Exchange slid 2%, hot-rolled coil fell 1.7%, wire rod plunged 4.7%, and stainless steel dipped 0.3%.

Other steel inputs were softer. Dalian coking coal and coke were down 1.5% and 2%, respectively.