China iron ore, coke slump more than 2% on cloudy demand outlook
MANILA, Oct 14 (Reuters) - Benchmark Dalian iron ore and coke futures slumped more than 2% in late trade on Monday following growing concerns about demand for the steelmaking raw materials, amid China’s renewed efforts to curb pollution by restricting steel mills operations.
Adding to the worries, industry data released on Monday showed auto sales in China fell for a 15th consecutive month in September, dampening hopes for a second-half turnaround in the world’s largest auto market.
Dalian Commodity Exchange’s most-traded iron ore contract , with January 2020 expiry, ended down 2.4% at 638.50 yuan ($90.41) a tonne.
“Traders have been wary of the impact of ongoing restrictions on steel mills in China,” said Daniel Hynes, senior commodity strategist at ANZ.
China’s top steelmaking city of Tangshan issued new anti-pollution restrictions on mill operations, effective from Oct. 10 to Oct. 31, according to industry websites.
Another Chinese city, Linfen, has also ordered steelmakers to stop sintering and pelletizing operations from Oct. 10, Hynes said.
As fresh steel production restrictions may curb iron ore demand in top steel producer and consumer China, market participants are also keeping an eye on supply-side issues.
Iron ore miner Vale SA is set to release its quarterly output report this week, which may shed light on its progress to restart operations following a deadly dam disaster earlier this year, Hynes said.
The Brazilian mining regulator has shut 54 dams so far in the second half of 2019 due to lack of certification, including 17 owned by Vale, he said. Vale’s reduced iron ore output has tightened global supply, pushing prices to five-year peaks in recent months.
