Iron ore slips after 3-session rally on Tangshan output curbs

SINGAPORE: Iron ore futures slipped on Wednesday after a three-session rally, pressured by fears of production cuts in China’s steelmaking hub of Tangshan, though losses were limited as potential supply disruptions in Australia curbed declines.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) fell 1.46% to 809.5 yuan ($117.47) a metric ton as of 0332 GMT.

The benchmark April iron ore on the Singapore Exchange also lost 1.46% to $106.1 a ton.

Tangshan activated a level-two emergency response to heavy air pollution on March 25, according to an announcement by local authorities on WeChat, stoking concerns of steel production cuts and heightened environmental inspections at mills in the area.

Global crude steel production fell 2.2% year-on-year to 141.8 million tonnes in February, World Steel Association data showed on Tuesday.

Output from China - the world’s biggest producer and consumer - dropped 3.6% to 76.1 million tonnes in February. Persistent oversupply in China has kept steel prices and mill margins under pressure.

Beijing reiterated its commitment to reducing steel output earlier this month, reinforcing expectations of weaker demand ahead and leading to a pullback in prices.

Potential supply disruptions in Australia, the world’s largest iron ore exporter, have curbed the downside.

A cyclone off Australia’s northeast coast this week is threatening mining operations, according to Australia’s Bureau of Meteorology and a note from ANZ.

The storm has prompted the evacuation of Port Hedland, the world’s biggest iron ore export port, while open pit mines may also fall within the cyclone’s impact zone, ANZ added.

Other steelmaking ingredients on the DCE languished, with coking coal and coke shedding 2.14% and 1.69%, respectively.

Steel benchmarks on the Shanghai Futures Exchange mostly retreated.

Rebar lost 0.45%, hot-rolled coil fell 0.33% and wire rod shed 0.39%.

Meanwhile, stainless steel firmed 0.73%.