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Dalian, SGX iron ore extends losses on Monday
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Temporary production curbs ongoing in North China's
Tangshan and
Handan
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Weakening iron ore drags down steel prices
(Updates prices)
BEIJING, Feb 27 (Reuters) - Dalian and Singapore iron
ore futures extended losses on Monday on concerns over near-term
weaker demand, after steel production hub Tangshan was required
on Saturday to shutter some capacity in response to heavy
pollution.
Tangshan's government said it would launch a level 2
emergency response from Sunday to deal with the forecast of
heavy air pollution this week. The northern city is one of
China's top steel producers.
Several mills planned to reduce their sintering capacity between 30% and 50% to meet the government requirements, consultancy Mysteel said in a report. It was not clear how long the production restrictions would last. The city of Handan, also a key steel producer, implemented similar curbs from Sunday.
The most-traded May iron ore futures contract on the Dalian Commodity Exchange (DCE) ended daytime traded 2.53% lower at 885.5 yuan($127.14) a tonne. On the Singapore Exchange, the benchmark March iron ore contract traded at $123.4 a tonne, down 2.64% as of 0735 GMT. "It's mainly the production restrictions [in Tangshan and Handan] that drove futures prices down this morning," said a Shanghai-based steel analyst, declining to be identified as they are not authorised to speak to media. The production curbs come ahead of the March 5 opening of China's annual parliament meeting, one of the most high-profile events of the year when Beijing typically makes extra efforts to ensure clear skies. Rising portside inventories are also adding to the headwinds on iron ore, said analysts from ANZ bank in a note. Total stockpiles rose 1.2% last week to the highest level since September, they added. Despite the weakness in iron ore, coking coal gained on expectations of reduced supply after coal mines stepped up safety checks following a serious accident last week while coke stabilized. Coking coal rose 1.15% to 2,064 yuan a tonne, while coke was flat. The evident weakness in iron ore drags down steel prices. Rebar on the Shanghai Futures Exchange inched down by 0.64% to 4,191 yuan a tonne, hot-rolled coil dipped 0.16%, wire rod moved down 0.32%. Stainless steel lost 1.37%. ($1 = 6.9645 yuan) (Reporting by Amy Lv and Dominique Patton; Editing by Sonia Cheema and Janane Venkatraman)
