Iron ore price rises on report China mills to temporarily halt output

Iron ore gained after a Chinese consultancy said several steel mills had been told by authorities they will need to temporarily halt production later this month due to air pollution concerns.

Futures for the steelmaking material rose by as much as 1.6% in Singapore, following a 2.1% weekly gain. Mysteel issued a report on Saturday that said some mills in the country’s steel-production hub of Tangshan had received notifications to stop producing from Aug. 25 to ensure clean air during the Sept. 3 military parade in the nearby capital.

“Steel-production cuts have counter-intuitively been digested as a positive by onshore markets, given that increasing steel prices and margins are relieving pressure on a heavily suppressed cost base,” Atilla Widnell, managing director of Navigate Commodities Ltd., said via text message.

Meanwhile, authorities have removed some restrictions on property purchases in Beijing, in a move that could improve demand for houses in the capital — and with it, the consumption of the steelmaking material. China’s property development has been a key source of demand for iron ore, and problems in the debt-ridden sector have been weighing on prices.

Iron ore has edged higher since the start of the year. In recent weeks, the broader campaign against China’s over-capacity — dubbed “anti-involution” — has boosted prices of industrial products and improved profit margins at struggling steel mills.

Meanwhile, on the London Metal Exchange, industrial metal prices were mixed. Copper was down 0.3% to settle at $9,731.50 a ton, aluminum fell and nickel edged higher.

(By Yihui Xie)