BEIJING, Aug 19 (Reuters) — Iron ore futures prices slid on Tuesday, pressured by concerns about demand for the steelmaking ingredient amid output controls in the northern region of top consumer China ahead of a military parade in early September and a weakening steel market.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) DCIOcv1 closed daytime trade 0.64 percent lower at 771 yuan ($107.35) a metric ton.
The benchmark September iron ore SZZFU5 on the Singapore Exchange was down 0.37 percent at $101.05 a ton, as of 0722 GMT.
Both have fallen for a fifth straight session, shedding about 3 percent.
Some steel mills in China’s key steel production hub of Tangshan have received verbal instructions to trim production to ensure better air quality in Beijing for a military parade commemorating the end of World War Two, consultancy Mysteel said in a note.
Such production restrictions for steel mills will dent their buying appetite for raw materials.
Even amid production controls, “steel fundamentals have showed signs of softening with a pick-up in inventories accelerating while downstream consumption remained sluggish,” said Guiqiu Zhuo, an analyst at broker Jinrui Futures.
Steel benchmarks on the Shanghai Futures Exchange lost ground. Rebar SRBcv1 fell 1.48 percent, hot-rolled coil SHHCcv1 shed 0.38 percent, wire rod SWRcv1 slipped 0.71 percent and stainless steel SHSScv1 retreated 1.07 percent.
That weakness has dragged prices of upstream raw materials, Jinrui’s Zhuo said.
Falling ore prices due to growing supply and dwindling demand in China have eroded miners’ profitability.
BHP said its annual profit fell to the lowest in five years. Coking coal DJMcv1 and coke DCJcv1, other steelmaking ingredients, dropped by 1.89 percent and 0.96 percent, respectively.
