Futures in the Singapore market this week fell more than 10 percent to the lowest level since November as China stepped up its efforts to reduce steel production volumes. Authorities have ordered steelmaking facilities to cut production throughout the year to curb environmental pollution, and data released Wednesday showed production fell to its lowest level since March 2020 last month.
While the measures are expected to intensify towards the end of the year, with restrictions typically becoming tighter during the winter period, officials also want a blue sky at next year's Winter Olympics in Beijing.
Commonwealth Bank of Australia analyst Vivek Dhar. “Uncertainty regarding steel production cuts, as well as the expectation of a downward trend in iron ore prices, are pushing steelmakers away from the market,” he said.
More broadly, the Chinese economy weakened in August. The increase in retail sales declined sharply after strict measures were taken to contain the Kovid-19 outbreak. While the pandemic was quickly brought under control, a new spread of the virus was seen this month in the south of the country. This indicates that consumers will remain cautious for a long time.
Iron ore futures rebounded to $115.30 per tonne after falling 5.6 percent in Singapore to as low as $113.95 per tonne. Prices have lost more than $100 since their peak in May. Iron ore prices fell 2.6 percent in China, while steel futures gained.
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