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Iron ore price down as China limits steel output

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The iron ore price is down as steel mills in China’s top producing province of Hebei have been ordered to limit output, in a bid to ensure blue skies for the once-every-five-year Communist Party Congress that starts in Beijing later this month.

Cuts of 30% to 50% will be applied to the sintering process, where iron ore is readied for the blast furnace to be forged into steel, outlets including Coke Union Information and Calian reported.

The restrictions will apply from October 14 to 22. Hebei, which neighbors Beijing, has made headway in reducing capacity in recent years but still accounts for about a fifth of national production.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $96.59 a tonne Tuesday morning, down 1.9%.

China typically mandates output curbs for highly polluting industries around the capital to ensure air quality for showcase events, and similar restrictions were ordered for the Beijing Olympics earlier this year.

“Chinese steel prices are likely to rebound in October with market fundamentals improving and macroeconomic support policies coming into force,” Mysteel consultancy said, citing its chief analyst Wang Jianhua.

“Caution is likely to prevail, however, ahead of this month’s Chinese Communist Party congress.”

The week-long congress begins on October 16.

(With files from Bloomberg and Reuters)