Iron ore prices fell on Wednesday on rising shipments from major suppliers.
Iron ore shipments from Australia and Brazil stood at 26.14 million tonnes last week, up by 1.1 million tonnes from the week earlier, data from Mysteel consultancy showed.
Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were down 3.2%, changing hands for $214.08 a tonne, according to Fastmarkets MB.
The most actively traded iron ore futures on the Dalian Commodity Exchange, for September delivery, fell 1.5% to 1,198 yuan ($187.26) per tonne at close.
Demand for the steelmaking ingredient has been supported by robust production at mills as the sector enjoyed decent profit margins.
China’s crude steel output last month hit a record at 99.45 million tonnes, data from the National Bureau of Statistics showed.
However, analysts with SinoSteel Futures warned that there is limited room for further growth in iron ore demand.
“Environmental protection measures in Tangshan have not been relaxed in the short term and have become more stringent,” SinoSteel said in a note.
China said on Wednesday it would release the country’s reserves of major industrial metals, including copper, aluminium and zinc in batches “in the near future.”
The country’s stockpiling body – China’s National Food and Strategic Reserves Administration – said the move would ensure the supply and price stability of bulk commodities.
Mining and steel stocks fell, with Rio Tinto, BHP and ArcelorMittal SA losing at least 0.7%.
“We haven’t seen the country release state reserves for years,” Jia Zheng, a commodity trader with Shanghai Dongwu Jiuying Investment Management Co told Bloomberg.
“This will boost short-term supply, sending a bearish signal to the market.”
($1 = 6.3976 Chinese yuan)
(With files from Reuters and Bloomberg)