Iron ore price plunges as Chinese demand softens

Port Rizhao, China. Stock Image.

Iron ore prices fell on Thursday as Chinese domestic consumption remains sluggish on steel production controls.

The most active iron ore futures on the Dalian Commodity Exchange, for September delivery, plunged as much as 5.6% to 999 yuan ($154.54) per tonne, their lowest since May 27.

Iron ore price - Fastmarkets

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $171.55 a tonne, down 6.5% from Thursday’s closing, the lowest since April.

“Domestic consumption (for iron ore) is weakening significantly… due to different perception of crude steel output cuts, iron ore prices have been fluctuated recently,” analysts with Huatai Futures wrote in a note.

China has asked mills to limit this year’s output to no more than the 2020 volume after the first-half production grew nearly 12% compared with a year earlier.

Under the current strict implementations of steel production controls, high iron ore prices are not seen to be supported, Huatai Futures added.

(With files from Reuters)