The most-traded May iron ore futures contract on the Dalian Commodity Exchange (DCE) was 0.95% lower at 890.5 yuan($129.41) a tonne as of 0203 GMT, following a 2.48% drop the previous day. "The main factors that weighed on (iron ore) prices are the environmental protection-induced production curbs among steel mills (in northern China) and uncertainties stemming from policy control in response to high prices," analysts at Huatai Futures said in a note. Northern China's Handan and Tangshan cities, two major steel-making hubs, implemented level-2 emergency responses on March 17 and March 20, respectively, following a forecast of heavy air pollution in the coming days. Other steel-making ingredients, such as coking coal and coke, also posted further losses with the former dipping 0.7% and the latter falling 0.54%. On the Singapore Exchange, the benchmark April iron ore , however, recorded a slight increase of 0.4% to $126 a tonne.
"The fluctuation (in iron ore prices) indicates that the
market is seeking a clear direction amid mixed factors at the
moment," said Yu Chen, a Shanghai-based senior iron ore analyst
at consultancy Mysteel.
Steel prices continued their downtrend but demonstrated some
resiliency. Rebar on the Shanghai Futures Exchange fell
0.35% to 4,218 yuan a tonne, hot-rolled coil dropped
0.3%, wire rod edged down 0.02% and stainless steel was flat.
"Construction steel production has picked up partly on the
stimulus of improved steel margins and the corresponding
destocking pace has also increased. And it's worth observing the
sustainability of steel consumption as well as the growing pace
in the supply side (of steel products)," analysts at Huatai
Futures added in the note.
($1 = 6.8813 Chinese yuan)
(Reporting by Amy Lv and Dominique Patton in Beijing; Editing
by Sonia Cheema)
