MANILA: Iron ore futures slipped in rangebound trade on Wednesday, as traders gauged the demand impact of China’s top steel-producing city of Tangshan ordering an output cut for the month of July amid deteriorating air quality.
The most-traded September iron ore contract on China’s Commodity Exchange ended morning trade 0.4% lower at 818.50 yuan ($113.19) per metric ton.
On the Singapore Exchange, the steelmaking ingredient’s benchmark August contract was down 0.8% at $107.95 per metric ton, as of 0506 GMT.
Tangshan’s steel production curbs add to worries about iron ore demand prospects this year in top steel producer and metals consumer China, as the country’s post-pandemic economic recovery appeared to have lost momentum in the second quarter.
Signs of rising global iron ore supply is also curbing prices, with Brazil’s exports of the material in June hitting 34.41 million metric tons compared with 32.02 million metric tons in the same month last year.
Iron ore shipments from Australia and Brazil rose by 2.7 million metric tons or 9.9% on the week to 29.4 million metric tons over June 26-July 2, consultancy and industry data provider Mysteel reported. Still, the overall sentiment in the ferrous metals industry was somewhat muted as traders continued to anticipate additional stimulus from the Chinese government to support the struggling domestic real estate sector in particular.
“Chinese steel prices will find upward momentum from the central government’s likely introduction of new economic stimulus policies this month, though the steel market’s weakening fundamentals threaten to be a drag,” Mysteel said in its monthly outlook.
Rebar on the Shanghai Futures Exchange fell 1%, hot-rolled coil shed 0.8%, wire rod dropped 0.9%, while stainless steel gained 0.3%. Other steelmaking ingredients were also under pressure, with coking coal and coke on the Dalian exchange down 1.5% and 1.4%, respectively.
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