Chinese iron ore futures climbed to their highest level in two weeks on Wednesday after an iron ore mining accident, stirring concerns about potential tight supply in the market. An explosion on Tuesday at an iron ore mining project owned by Huamei Group Company in China's northeastern province of Liaoning killed 11 people and injured nine others.
The project was under construction, with the first phase due to open in 2019 with production slated at 15 million tonnes per year. The explosion came just a month after an accident at a small coal mine in central Hunan province that killed two workers, triggering concerns that the safety watchdog may tighten inspections at mines across the country.
The most-active iron ore futures on the Dalian Commodity Exchange rose as much as 3 percent to 476 yuan ($74.52) a tonne in early trade on Wednesday, its highest since May 21. It closed 1.8 percent higher at 470.5 yuan a tonne. The rally also came after Tangshan, China's top steelmaking city in Hebei province, said it planned to close 226 mining firms, according to local media.
Benchmark Shanghai construction rebar prices rose 1.9 percent to 3,776 yuan a tonne, lifted by local media reports that steel mills at Tangshan city had been asked to cut output to help curb pollution. Sintering and shaft furnaces at steel mills in some regions in the city were ordered to shut from June 5 to June 7 due to weather conditions conducive to pollution. Other Tangshan mills should cut output by 50 percent over the period, according to industry media citing local authorities.
Daily crude steel output by major steel firms over May 10-20 continued to increase, reaching a fresh record at 1.97 million tonnes, data from China's Iron & Steel Association showed. Spot steel prices fell 0.2 percent to 4,328.97 yuan a tonne on Tuesday, data from Mysteel consultancy showed.
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