The iron ore price extended its slump below $100 a tonne as China stepped up restrictions on industrial activity in some provinces.
The world’s biggest steelmaker is intensifying production curbs to meet a target for lower volumes this year as it works toward a target of reaching carbon neutrality by 2060.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $92.98 a tonne, down 8.7% from Friday’s closing.
Mining stocks also slid, with BHP Group down more than 11% from last Monday, Rio Tinto Group down 10%, and Vale down 16%.
Prices have collapsed about 60% since hitting a record in May, and are below three figures for the first time in more than a year.
“We anticipate another decline in weekly Chinese steel production numbers, which will undermine iron ore prices once again,” said Atilla Widnell, managing director at Navigate Commodities.
The research firm has a short-term price target of $94.41 to $98.28 a tonne.
Steel mills in Jiangsu province have received instructions to reduce production as part of broader curbs on industrial activity aimed at lowering power usage, Mysteel reported, citing its survey of operators.
The cuts are concentrated between now and October 15 and are focused on construction steel.
Producers in Zhejiang province are also being asked to limit operations until September 30. Calls to Jiangsu and Zhejiang’s provincial information departments were not answered on a public holiday.
“Stringent production controls have driven market prices lower recently, and pessimistic outlook for demand have intensified,” analysts with SinoSteel Futures wrote in a note.
The decline “has played out faster than expected,” said UBS Group AG. UBS predicts prices will average $89 next year, a 12% cut to its previous forecast.
Prices are also being buffeted by a downturn in the property sector.
The property giant Evergrande has started to repay investors in its wealth management business with property this week while struggling to meet the interest payments on its debts.
The company’s deepening debt problems have triggered fears over the impact its potential collapse could have on China’s economy.
Major banks have reportedly been told that they won’t receive interest payments on loans that are due Monday, while interest payments of $84 million on the firm’s bonds are also due on Thursday.
(With files from Bloomberg and Reuters)