Dalian iron ore futures extended their losses into a sixth session on Thursday amid fresh reports about stepped-up steel production curbs in top producer China, while the front-month contract in Singapore traded below $80 a ton.
The most-traded January 2020 iron ore contract on the Dalian Commodity Exchange fell as much as 1.7 percent to 583.50 yuan ($82.58) a ton, hovering near a 10-week low hit on Wednesday.
In the Singapore Exchange, the most-active October 2019 contract traded as low as $78.39 a ton. It was up 1 percent at $78.49 by 0322 GMT.
Wu’an city, a major production base for wire rod and medium plate in China’s Hebei province, has decided to strengthen efforts to control air pollution by further restricting operations at nine steel mills over a 10-day period from Aug. 22, according to a report by Mysteel consultancy.
This follows a move by the top steelmaking city of Tangshan, also in Hebei, to deepen production cuts over a four-day period that ended on Wednesday.
The anti-pollution steel production curbs in China are widely expected to continue and may intensify ahead of the nation’s National Day celebrations in early October.
Dalian iron ore has fallen more than 20 percent in August, on track for its worst month since March 2018, after eight consecutive months of gains, as concerns over supply eased while demand slowed.
“We believe the selling has been overdone,” said ANZ senior commodity strategist Daniel Hynes. “We see prices stabilizing at around USD90/t in the near term.”
Benchmark spot 62 percent iron ore for delivery to China slumped 5.5 percent on Wednesday to $86.50 a ton, the lowest since March 29, SteelHome consultancy data showed.
“Steel output curbs in China and ongoing trade tension with the US are the key headwinds,” Hynes said in a note. “These should result in growth in steel production easing from the 10.8 percent achieved in H1 2019.” – Reuters