BEIJING: Iron ore futures erased earlier gains to trade lower on Monday, weighed by rising inventory and looming demand concerns sparked by the latest market talks of production control in the northern region of top consumer China.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 0.64% lower at 772 yuan ($107.52) a metric ton, the lowest since July 16.
The benchmark September iron ore on the Singapore Exchange slipped 0.25% to $101.65 a ton by 0715 GMT after touching the lowest since August 4 at $101.
Pressuring prices was a pick-up in portside inventory, which climbed 0.7% on the week to 131.05 million tons by August 15, the highest since July 25, data from consultancy Steelhome showed.
Moreover, steelmakers in key Chinese steel production hub Tangshan were rumoured to have received oral instructions to cut output from August 31 to September 3, the day of a military parade commemorating the end of World War Two, to improve air quality in Beijing.
Reuters could not verify the authenticity of the production restriction.
Prices gained in the morning trade amid firm demand in the near term with the average daily hot metal output, a gauge of ore demand, climbing 0.1% week-on-week to 2.41 million tons, as of August 14, data from consultancy Mysteel showed.
Additionally, US President Donald Trump unveiled plans for additional steel duties in the coming weeks, although market participants played down potential impact.
“We expect China’s steel industry to be relatively immune to ongoing trade tensions with the US, with trade to other markets such as Europe and Asia picking up the slack,” ANZ analysts said.
Coking coal and coke, also steelmaking ingredients, eased 2.94% and 1.56%, respectively.
Steel benchmarks on the Shanghai Futures Exchange lost ground. Rebar lost 0.88%, wire rod fell 1.26%, hot-rolled coil dipped 0.2% and stainless steel was little changed.