Chinese iron ore futures pulled back on Wednesday after data showed imports of the steelmaking commodity by the world’s biggest buyer declined to 20-month lows as steel mills curb output in line with Beijing’s war against smog.
China’s iron ore imports fell 23 percent in October from a record level in the previous month to 79.49 million tonnes, and analysts predict purchases will remain low in coming months as Beijing enforces the production restrictions over winter.
The slide in iron ore prices followed a retreat in rebar steel futures that came after a six-day rally.
China has ordered industrial plants across the northern part of the country to slash production from November through March, including steel producers. Some cities, including top steelmaker Tangshan, have already enforced cuts since October.
The most-traded iron ore contract for January delivery on the Dalian Commodity Exchange closed down 0.5 percent at 466 yuan ($70) a tonne. It touched a near six-week high of 475 yuan on Tuesday.
The most-active rebar on the Shanghai Futures Exchange slipped 0.4 percent to 3,744 yuan a tonne.
“I believe from now on we will see more production cuts in northern China and this will eventually impact iron ore demand,” said an iron ore trader in Shanghai.
The sharp drop in iron ore imports last month was also due to the week-long National Day holiday in China in October, said Wang Di, consultant at CRU in Beijing.
Di said imports may remain low in this month and the next.
“Given the production cuts and the very high port stocks at the moment, I don’t think there’s very strong demand,” she said.
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB fell 1.1 percent to $62.66 a tonne on Tuesday, a day after surging 5.8 percent to a six-week top, according to Metal Bulletin.
Source: Reuters And Hellenic Shipping News