Dalian and Singapore iron ore futures slumped for a fourth consecutive session on Wednesday, trading closer to $100 a ton, as electricity rationing in parts of China has led to steel mill shutdowns.
Analysts said a heatwave gripping several regions in top steel producer China since mid-July has caused power shortages, forcing authorities to ration electricity.
In China’s southwestern Sichuan province, authorities began limiting electricity supply to homes, offices and malls on Wednesday.
Nearly 20 steel mills in China’s northwest regions had suspended operations as of Wednesday, according to steel industry data provider SMM.
The power rationing is expected to continue for a week, SMM said.
“Our base case is that the power rationing this time around should be milder than that seen last year in terms of duration and scale”, and confined to few provinces, J.P. Morgan analysts said in a note.
Iron ore’s most-traded January 2023 contract on China’s Dalian Commodity Exchange was down 1.7 percent at 703 yuan ($103.85) a ton. – Reuters