Iron ore slumps on risk aversion, China steel output curbs

The most-traded May iron ore on China's Dalian Commodity Exchange fell as much as 3% to 900.50 yuan ($130.31) a tonne, its weakest since March 9. On the Singapore Exchange, benchmark April iron ore shed as much as 3.2% to $127.95 a tonne. "The international macro volatility has intensified," Sinosteel Futures analysts said in a note. Asian stocks slid and investors turned to the safety of gold, bonds and dollars, as Swiss lender Credit Suisse became the latest focal point for fears of a banking crisis. Also, "policy risks continue to increase", adding to iron ore's price volatility, Sinosteel analysts said. China will again cut annual crude steel production in 2023, marking the third year in a row that the government has mandated reduced output, Bloomberg News reported, citing a person familiar with the decision. As part of the plan, China will also ban new steelmaking capacity, the report added. No official pronouncement has yet been made about the plan. In the absence of any official directive on production restrictions, and with the overall outlook positive for China's economic rebound this year, Sinosteel said there was "high probability" that steel mills will maintain "a stable increase in production" during the first half of 2023. Rebar on the Shanghai Futures Exchange ended morning trade 2.7% lower, hot-rolled coil shed 2.8%, wire rod slumped 3.1%, and stainless steel dropped 1.8%. On the Dalian exchange, coking coal and coke fell 3.4% and 2.1%, respectively.
(Reporting by Enrico Dela Cruz in Manila; Editing by Rashmi Aich)