March 18, 2018, 10:04 am
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Iron ore extends losses

Chinese iron ore futures fell for a fifth session in six on Thursday, reflecting oversupply concerns as global miners ramp up output while near-term steel demand in top consumer China looks at risk.

Amid weaker futures, spot iron ore dropped below $70 a ton this week for the first time since July, as bids for physical cargoes slipped, traders said.

The most-traded iron ore on the Dalian Commodity Exchange touched a session low of 483 yuan ($73) a ton, its weakest since July 24. It was down 2.3 percent at 484 yuan, as of 0215 GMT.

Among the new iron ore supply to the market includes top producer Vale’s expansion project, which produced 12 million tons in January-August, and is expected to produce 9-11 million tons in September-December.

The project will help produce up to 90 million tons a year from 2018 onwards.

A Shanghai-based trader said the sustained drop in iron ore stockpiles at China’s ports was not necessarily reflective of firm demand for the raw material.

“There were some delays in the discharge of ships because of stormy weather in the eastern coast of China and also other parts of North Asia,” he said.

Port inventory dropped for a seventh consecutive week to 131.85 million tons last week, the lowest since mid-April, data from SteelHome consultancy showed.

Iron ore for delivery to China’s Qingdao port rose 1.2 percent to $69.65 a ton on Wednesday, a day after touching a near two-month trough, according to Metal Bulletin.

In a potential risk for Chinese steel demand, Beijing said it would suspend construction of major public projects during winter to improve the capital’s air quality.

Construction of road and water projects, as well as demolition of housing, will be banned from Nov. 15 to March 15, within the city’s six major districts and surrounding suburbs, the official Xinhua News agency reported on Sunday.

The most-active rebar on the Shanghai Futures Exchange slipped 0.4 percent to 3,733 yuan per ton.

Meanwhile, shanghai aluminum prices hit their highest in nearly six years on a report that two companies in Henan province have started cutting production almost two months before China’s official winter restrictions kick in.

The most-traded aluminum contract on the Shanghai Futures Exchange finished up 3.36 percent, its biggest one-day leap since Aug. 9, at 17,055 yuan ($2,594.86) per ton for its highest close since October 2011.

Prices are up by some 28 percent so far this year on concerns that closure of illegal capacity and a crackdown on pollution will leave the market short of supply.

On Wednesday, industry website SMM said the city of Jiaozuo’s environmental protection office issued a notice that mentioned steps to curb output by a Zhongzhou Aluminum, an alumina refinery belonging to Aluminum Corp of China (Chinalco) and another company, Jiaozuo Wanfang Aluminum.

Chinalco, China’s largest state-run aluminum producer, and Jiaozuo Wanfang were to start reducing production by more than 30 percent ahead of time on Tuesday, according to report. The measures will last until March 15, 2018, the report said. – Reuters
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