BEIJING: Prices of iron ore futures hit a two-week high on Thursday, bolstered by China’s push to lower steel output as it tackles overcapacity.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended up 1.74 percent at 790.5 yuan (USD110.51) a metric ton, the highest since August 14. The contract has risen 1.5 percent so far in August.
The benchmark October iron ore on the Singapore Exchange was up 1.5 percent at USD104 a ton, as of 0712 GMT, also its strongest since August 14. It has jumped 4 percent so far this month.
China will push to cut steel production between 2025 and 2026, according to an official document reviewed by Reuters and a source with knowledge of the matter.
Analysts said this could help improve steels mills’ profits and strengthen their capacity to absorb higher prices of raw materials. Prices of the key steelmaking material were also supported by expectations of improving demand after production restrictions in Tangshan, a top Chinese production hub in Hebei province. Steelmakers in Tangshan are required to limit production in order to curb air pollution in Beijing ahead of a military parade on September 3 to commemorate the end of World War Two.
“Hot metal output will likely climb after this round of production control ends. The anticipation of the US Federal Reserve cutting interest rate in September also lent some support to ore prices,” said Qingwei Xie, an analyst at consultancy Shanghai Metals Market. Other steelmaking ingredients were mixed.
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