BEIJING: Iron ore futures prices slid on Tuesday, as the production controls in the northern region of top consumer China for its military parade in early September and a weakening steel market blurred the demand outlook of the key steelmaking ingredient.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 0.84% lower at 769.5 yuan ($107.14) a metric ton.
The benchmark September iron ore on the Singapore Exchange was down 0.42% to $101 a ton, as of 0338 GMT.
Both have fallen for a fifth straight session with a drop of around 3%.
Some steel mills in China’s key steel production hub of Tangshan have received verbal instructions to trim production to ensure better air quality in Beijing for a military parade commemorating the end of World War Two, consultancy Mysteel said in a note. Such production restrictions among steel mills will dent their buying appetite for raw materials.
Even amid production control, “steel fundamentals have showed signs of softening with a pick-up in inventories accelerating while downstream consumption remained sluggish,” said Guiqiu Zhuo, an analyst at broker Jinrui Futures. Steel benchmarks on the Shanghai Futures Exchange lost ground.
Rebar fell 1.17%, hot-rolled coil shed 0.15%, wire rod slipped 0.59% and stainless steel retreated 1.11%.
That weakness has dragged prices of upstream raw materials, Jinrui’s Zhuo said.
Falling ore prices due to growing supply and dwindling demand in China have eroded miners’ profitability.
BHP said its annual profit fell to the lowest in five years. Coking coal and coke, other steelmaking ingredients, dropped by 1.07% and 0.52%, respectively.