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(Bloomberg) – Iron ore extended its fall below $ 100 a tonne as China tightened restrictions on industrial activity in some provinces.
Singapore futures fell as much as 12% on Monday in thin trading due to a public holiday in China. Prices have slumped about 60% from a record high in May and are below triple digits for the first time in more than a year as Chinese demand slows.
The world’s largest steelmaker is stepping up the brakes on steel production to meet a target of lower volumes this year as it pursues its desire to be carbon neutral by 2060. More recently, restrictions have been concentrated on improving air quality for next year’s Winter Olympics.
The measures are already showing signs of effect. Production fell in early September after hitting its lowest level in 17 months in August.
“We anticipate a further decline in weekly steel production figures in China, which will further undermine iron ore prices,” said Atilla Widnell, Managing Director of Navigate Commodities. Weekly shipments from Australia are also higher on a week-to-week basis and exports from Brazil have been strong, he said. The research company has a short-term goal of $ 94.41 to $ 98.28 per tonne.
In the latest round of measures, factories in Jiangsu Province were given instructions to cut production as part of broader restrictions on industrial activity aimed at reducing energy consumption, Mysteel reported, citing his survey of operators. The cuts are concentrated by October 15 and focus on structural steel. Producers in Zhejiang province are also urged to limit their operations until September 30. Calls to the provincial news services in Jiangsu and Zhejiang were not answered on a public holiday.
Read: Iron Ore’s brutal slump below $ 100 signals more trouble to come
Measures taken by China to tame its gigantic steel industry have shaken ferrous markets this year, with an increase in iron ore in the first half of the year as factories rush to load their steel volumes before new restrictions are put in place. of production. Prices are also being rocked by a slowdown in the real estate sector and fears that the uproar at developer China Evergrande Group may further weigh on a crucial source of demand for steel and metals.
Futures were 10% lower at $ 91.40 a tonne as of 3:04 p.m. local time. Prices are down for a ninth day, heading for the longest string of losses since 2015. Miners’ shares also fell, with BHP Group down 4.2%, Rio Tinto Group losing 3.6% and Fortescue Metals Group Ltd. losing 3.7%.
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