Chinese iron ore demand in November to fall by 6 million tonne

Mining News -China Iron & Steel Association in a report published on its website said that cutbacks in steel output in 28 Chinese cities are set to start on November 15 and more cities may join the reductions, suggesting iron ore demand could drop by a larger extent than expected.

China`s government has ordered the production curbs to meet environmental pollution targets to reduce the smog that typically occurs in northern China during the winter period from November to March. Some cities, including leading steel-producing cities Tangshan and Handan, have started the cuts one month ahead of the schedule.

CISA said that "Taking the seasonal factor into consideration, iron ore demand will fall by 6 million tonnes in November, 4.5 million tonnes higher than October.”

Chinese iron ore demand usually slows in November and December as steel mills schedule maintenance while construction demand falls during colder weather.

It added that iron ore supplies from what CISA calls the top four global miners will increase 10.95 million tonnes to 290 million tonnes in the fourth quarter from the previous quarter, weighing down the market.

The miners are BHP Billiton , Rio Tinto , Vale and Fortescue Metals Group .

Iron ore prices on the Dalian Commodity Exchange fell 5.8% in October, down for a second month.

CISA warned that iron ore prices could be hit harder if steel mills and traders dump their stocks of the raw material.

According to consultants Steelhome, iron ore stockpiles at China`s main ports were at 137.87 million tonnes as of November 10, up 28% from a year ago.