Iron ore slumps as China production cuts spark fears of demand drop

BEIJING: Dalian and Singapore iron ore futures slipped on Monday as traders became cautious of faltering demand after China’s top steelmaking hub Tangshan ordered local steel mills to reduce production in a bit to improve air quality. The municipal government of north China’s Tangshan asked the 11 A-class steel mills to take initiative to cut production, while mills rated as B-class or below need to suspend 50% of their sintering equipment over July 1-31, analysts at consultancy Mysteel said in a note. There were no statements on the websites and wechat accounts of Tangshan’s relevant governments. The municipal bureau of ecology and environment did not immediately respond to a request for comments.

A-class mills cut production by 30% while the rest cut their sintering production by 50%, Mysteel said, adding that many local mills have abundant sintered ore inventory to sustain production for around 20 days.

Meanwhile, an accident at an iron ore mine in northern China has raised concerns that Beijing could order wider safety checks on mines, disrupting domestic iron ore supply.

The most-traded September iron ore on the Dalian Commodity Exchange (DCE) ended morning trading 1.92% lower at 817 yuan ($112.81) a metric ton. The benchmark August iron ore on the Singapore Exchange was 1.3% lower at $107.65 a metric ton, as of 0330 GMT.