Bloomberg - Iron ore extended its slump below $100 a ton as China stepped up restrictions on industrial activity in some provinces.
Prices have fallen about 60% since a record in May, with futures trading below three figures for the first time in over a year as steel production curbs demand. China is targeting to reduce greenhouse gas emissions this year as it pushes forward with its promise to be carbon neutral by 2060, while more recent restrictions have focused on improving air quality for the Winter Olympics next year.
Measures already show signs of taking effect. Production fell in early September after a fall to a 17 months low in August.
We anticipate another decline in weekly Chinese steel production numbers, which will undermine iron ore prices once again, said Atilla Widnell, CEO of Navigate Commodities. Weekly shipments from Brazil are also higher week on week, and Australia exports have been strong, he said. The research firm has a short-term goal of $94.41 to $98.28 a ton.
In the latest round of measures, mills in Jiangsu province have received instructions to reduce production as part of broader curbs on industrial activity aimed at lowering power usage, Mysteel reported, citing its survey of operators. The cuts are concentrated between now until 15th Oct and focused on construction steel. Producers in the province of Zhejiang are also being asked to limit operations until Sept. 30. Calls to the Public Information Department of Jiangsu and Zhejiang weren t answered on a public holiday.
China s moves to rein in its mammoth steel industry have roiled the ferrous markets this year, with iron ore spiking in the first half as mills rushed to front-load their steel volumes ahead of more production restrictions being rolled out. Prices are also impacted by a downturn in the property sector and concerns that the tumult at developer China Evergrande Group may further weigh on a crucial source of demand for steel and metals.
Futures sank briefly more than 11% in Singapore before trading 5% lower in Singapore to $16.60 this morning at 10:51 a.m. local time. Prices have dropped for a ninth day, heading toward the longest period of losses since 2015.