(Bloomberg) – Iron ore extended its plunge below $ 100 a ton as China tightened industrial restrictions in some provinces.
Singapore futures fell as much as 12% in thin trading on Monday due to a holiday in China. Prices have plummeted about 60% since a record high in May and are below three-digit numbers for the first time in more than a year as Chinese demand eases.
The world’s largest steelmaker is tightening steel production restrictions to meet a lower volume target this year while pushing ahead on its promise to be carbon neutral by 2060. More recently, restrictions have focused on improving air quality for the Winter Olympics next year.
Measures are already having an effect. Production declined in early September after falling to a 17-month low in August.
“We expect a further decline in weekly Chinese steel production figures, which will undermine iron ore prices again,” said Atilla Widnell, managing director of Navigate Commodities. Weekly deliveries from Australia are also increasing from week to week and Brazil’s exports have been strong, he said. The research firm has a short-term goal of $ 94.41 to $ 98.28 per tonne.
In the latest round of measures, mills in Jiangsu Province have received instructions to cut production as part of a broader restriction on industrial activities to reduce electricity consumption, Mysteel reported, citing a survey of operators. The cuts are concentrated through October 15 and focus on structural steel. Manufacturers in Zhejiang Province are also being asked to limit operations until September 30th. Calls to the information departments in Jiangsu Province and Zhejiang Province were not answered on a public holiday.
Read: Iron Ore’s Brute Breakdown Below $ 100 Means More Trouble
China’s efforts to contain its mammoth steel industry have shaken iron markets this year, with iron ore soaring in the first half of the year as mills rushed their steel volumes before further production restrictions were put in place. Prices are also being hurt by a downturn in the property sector and concerns that the turmoil at developer China Evergrande Group could further weigh on a key source of demand for steel and metals.
Futures were 10% lower at $ 91.40 per ton at 3:04 p.m. local time. Prices have fallen for a ninth day, heading for the longest losses since 2015. Miners’ shares also plummeted, with BHP Group losing 4.2%, Rio Tinto Group losing 3.6% and Fortescue Metals Group Ltd. Lost 3.7%.
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