China's Dalian iron ore futures rose on Tuesday on concerns of tight supplies after a report said Tangshan city plans to shut hundreds of mining companies, while mounting stockpiles at ports limited gains. Tangshan, the country's No.1 steelmaking city in Hebei province, said it will close 226 mining firms - half iron ore miners - that do not have legitimate licenses as part of efforts to curb illegal mining and cut pollution.
The central government, meanwhile, has sent teams of inspectors to 10 regions to check rectification measures after previous probes uncovered thousands of environmental violations. Some regions have promised to beef up anti-pollution curbs. "The inspections may affect some iron ore output, which will help ease oversupply pressure in the market," said analysts at Founder CIFCO Futures in a note, adding that the impact may be offset by rising imports of the raw material.
The most-traded iron ore, for September delivery, on the Dalian Commodity Exchange closed 1.7 percent higher at 467 yuan ($72.90) a tonne. Stockpiles of imported iron ore at Chinese ports continued to rise last week as of June 1, adding 1.4 million tonnes to 161.98 million tonnes, the most since at least 2011, data compiled by SteelHome showed. The most-traded construction steel rebar futures on the Shanghai Futures Exchange recovered during afternoon trading, gaining 0.1 percent to 3,736 yuan, after some losses in the morning.
Last week, the utilisation rate at blast furnaces across the country fell for the first time in three months, easing 0.14 percentage points to 71.82 percent, data from Mysteel consultancy showed. Local authorities in eastern province Shandong are encouraging industrial plants to reduce emissions ahead of the Shanghai Cooperation Organization summit in Qingdao city this week. Some mills in Shandong have scheduled maintenance, but the market expects the impact on output to be limited.
"Currently lukewarm trade in the market is mainly due to oversupply ... the coming rainy season will further curb steel demand downstream," said a Shanghai-based trader. Rebar stocks at Chinese traders fell to 5.32 million tonnes last week, down 5.9 percent from a week earlier, according to SteelHome data. Spot steel prices fell 0.1 percent to 4,338.63 yuan a tonne on Monday, Mysteel data showed.
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