SINGAPORE: Iron ore futures rose on Tuesday after steel mills in Chinese production hub Tangshan were ordered to halt operations to improve air quality ahead of a major military parade, while lower shipments also lent support to prices.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) was up 2.36% at 801 yuan ($111.42) a metric ton.
The benchmark September iron ore on the Singapore Exchange was trading 1.06% higher at $104.6 a ton, as of 0708 GMT.
Steel mills in Tangshan have been ordered to stop operations from August 25 to ensure clean air in northern China ahead of the September 3 military parade commemorating the end of World War Two.
This could remove excess steel from the market and help push steel prices higher, said analysts at ANZ, adding that this would ultimately support steel mill margins and iron ore demand.
The total volume of iron ore shipments from top producers Australia and Brazil fell 1.5% week-on-week, according to data from Chinese consultancy Mysteel.
Broadly, China’s producer price index (PPI) fell 3.6% year-on-year in July, more than expected due to extreme weather and global trade uncertainties.
Despite Chinese policy measures to curb disorderly competition, some analysts remained cautious that the measures may have a limited impact without demand-side stimulus or reforms.
This comes amid a prolonged housing downturn in China’s property sector, weighing on consumer spending and factory activity.
Other steelmaking ingredients on the DCE surged, with coking coal and coke up 6.97% and 4.5%, respectively.
Recent coal mine inspections to check overproduction sparked concerns about cuts, driving coking coal prices higher, said broker Hexun Futures.
Steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar increased 0.96%, hot-rolled coil climbed 1.4%, wire rod rose 1.16% and stainless steel edged up 0.38%.
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