MANILA: Iron ore futures in top steel producer China dropped on Friday to be on track for a second consecutive weekly loss, with the benchmark Dalian price hovering near its lowest in seven months on fears of further steel production curbs.
The most-traded January iron ore on the Dalian Commodity Exchange fell 1.7% to 722 yuan ($112) a tonne. It touched 717.50 yuan a tonne on Thursday, the weakest since Feb. 4.
October iron ore on the Singapore Exchange shed 0.7% to $128.70 a tonne by 0330 GMT.
Spot iron ore tumbled to a nine-month low of $131.50 a tonne on Thursday, SteelHome consultancy data showed.
"Iron ore prices have had a volatile couple of months but as August closed, it was clear there had been a quantum shift in the market leading us to revise down our year-end forecast from $175/tonne to $125/tonne," said Westpac senior economist Justin Smirk.
China has vowed to limit crude steel output this year at no higher than its 2020 production to curb industrial pollution. But news of possible further restrictions rattled the market.
In Jiangsu, China's second-largest steel-producing province, a campaign to monitor energy consumption among industrial enterprises including steelmakers raised fears of further disruption in blast furnace operations, Mysteel consultancy reported.
Iron ore's slump strikingly differs from the surge in metallurgical or coking coal, another steelmaking input, and its processed form - coke - which hit a record high this week on supply worries.
Dalian coking coal fell 0.6% but was up nearly 13% this week. Coke slumped 1.7% after a 20% jump in a nine-session rally.
"With the market closed to Australian coal, China has to source met coal from other producers and pay a massive premium to do so," Smirk said.
Rebar on the Shanghai Futures Exchange rose 1.6%, while hot-rolled coil advanced 0.7%. Stainless steel gained 1.2%.
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