Iron ore prices fell on Wednesday on cooling demand as mills controlled their crude steel production, while arrivals of the steelmaking ingredient increased.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $214.79 a tonne on Wednesday, down 3.1% from Tuesday’s closing.
The most-traded iron ore futures on the Dalian Commodity Exchange for September delivery, declined 3.9% to 1,174 yuan ($181.33) per tonne at close.
The dollar also climbed, reducing the appeal of raw materials priced in the currency.
Some steel producers in China’s Jiangsu, Fujian and Yunnan provinces were told by the government to cut production as the country aims to keep its annual output no higher than it was in 2020.
Meanwhile, iron ore arrivals in China recovered last week. Portside inventories of the ingredient rose for the third week and stood at 127.34 million tonnes as of July 18, according to SteelHome consultancy.
Despite China’s move to control steel output, the bull market for iron ore is not about to end soon, Nicholas Snowdon, Goldman’s head of base metals and bulks research, told CNBC.
“Even as China shows some signs of decelerating in steel demand growth rate in the second half of the year and into 2022, the rest of the world and (developed market) steel demand dynamics are incredibly strong,” Snowdon was quoted at the Singapore Iron Ore Forum.
“For now, it looks like a very tight market with a very strong underpin from supply demand, and still robust demand growth rates.”
(With files from Reuters)