Benchmark iron ore futures in China tumbled for a second straight session on Tuesday, as Beijing’s plans to step up inspection into commodity prices dented sentiment.
The most-traded iron ore contract on the Dalian Commodity Exchange, for September delivery, dropped as much as 5.2% to 1,110 yuan ($171.75) a tonne, its lowest in two weeks. It closed down 2.7% at 1,139 yuan per tonne.
“Following the recent macro policies … speculations have begun to cool down and iron ore prices have fluctuated”, analysts at Huatai Futures wrote in a note.
China’s state planner and market regulator on Monday looked into spot market at the Beijing Iron Ore Trading Center and said they would closely monitor prices and investigate malicious speculation.
Meanwhile, Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were up 2.8%, changing hands for $214.32 a tonne, according to Fastmarkets MB.
Global steel output shot up by 16.5% year-on-year in May as an easing of pandemic restrictions fuelled economic activity, but growth in China cooled.
Worldwide crude steel production rose to 174.4 million tonnes in May compared to a year earlier, the World Steel Association said in a statement.
Steel output in China, the world’s top producer and consumer of the metal, is expected to continue to lose steam in coming months as the government seeks to curb emissions and dampen credit growth, Capital Economics said.
Although crude steel production in China rose 6.6% year-on-year to 99.5 million tonnes in May, daily output fell 1.6% month-on-month, Caroline Bain, chief commodities economist at Capital Economics, said in a note.
“We expect China’s production to continue to ease back over the course of this year as demand softens,” Bain said.
In contrast, output elsewhere surged, with Japan, India and the United States rocketing 42%, 47% and 48% year-on-year respectively.
(With files from Reuters)