"The domestic market remained wary of the impact of production restrictions in (China's major steel production hub) Tangshan. Production curbs are unlikely to lessen ahead of the two sessions," said Yu Chen, a senior iron ore analyst at consultancy Mysteel, referring to China's annual parliament meeting that opens on Mar. 5. Meanwhile, on the Singapore Exchange, the benchmark March iron ore traded at $123.75 a tonne, up 0.83%. "(Iron ore)fundamentals are supportive for the moment as the daily hot metal output continues to pick up," said Pei Hao, a Shanghai-based senior analyst from FIS, an international brokerage firm. "Sometimes, the SGX futures prices are more reflective of fundamentals."
Supply remained relatively tight and demand will be supported by the pick-up in downstream steel demand, analysts at Huatai Futures said in a note, warning the possible increasing pricing volatility stemming from policy uncertainties. Brazilian miner Vale SA on Monday said its production of high-grade iron ore agglomerates is expected to increase in coming years as it sees the average premium for better quality rising in a tightening market.
The other steel-making ingredients lost the ground gained a day ago from expectations of reduced supply following enhanced safety checks at coal mines.
Coking coal declined 2.3% while coke shed 2.07%.
Steel prices continued the downward trajectory amid weakening raw material prices.
Rebar on the Shanghai Futures Exchange fell 0.88% to 4,164 yuan a tonne, hot-rolled coil dipped 0.7%, wire rod lost 1.57%, and stainless steel moved down 0.57% ($1 = 6.9318 Chinese yuan renminbi) (Reporting by Amy Lv and Dominique Patton in Beijing; Editing by Nivedita Bhattacharjee)
