Iron ore price dives on new steel curbs in China

The iron ore price fell again on Monday after China’s steel-producing province Yunnan asked local mills to adjust production schedules while ensuring that its 2021 crude steel output falls.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $123.84 a tonne, down 4.6% from Friday’s closing.

Part of the planned September crude steel production would be postponed to the last two months of the year, according to a government document.

The province, which makes about 2.3% of China’s total crude steel, has been missing energy consumption targets and suffering from power shortages. Yunnan also ordered its aluminum smelters to keep average monthly output for September-December at August volumes or lower and the cement industry to cut September production by more than 80% from August.

China has vowed to limit crude steel output this year at no higher than its 2020 production to curb industrial pollution.

Read more: Iron ore price hits one year low on China demand collapse

The most-traded January iron ore contract on the Dalian Commodity Exchange ended daytime trading 0.3% lower at 732.50 yuan ($113.66) a tonne. It touched 717.50 yuan a tonne on Thursday, the weakest since February 4.

Iron ore futures in Singapore are down about 45% from a peak set in May.

“Iron ore prices have had a volatile couple of months but as August closed, it was clear there had been a quantum shift in the market leading us to revise down our year–end forecast from $175/tonne to $125/tonne,” said Westpac senior economist Justin Smirk in a recent note.

(With files from Reuters and Bloomberg)