Dalian iron ore set to see second weekly drop on China’s steel production brakes
Band Enrico Dela Cruz
July 2 (Reuters) – Dalian’s benchmark iron ore fell on Friday, under pressure from futures contracts for other steelmaking ingredients in China, as the world’s largest steel producer steps up efforts to cut production in order to achieve its carbon emissions target.
Most-traded iron ore in September on China’s Dalian Commodity Exchange DCIOcv1 was down 2.2% to 1,147.50 yuan ($ 177.19) per tonne, as of 03:30 GMT, and was expected to post a second consecutive weekly loss.
Iron ore on the Singapore Stock Exchange SZZFQ1 lost 0.8% to $ 203.30 a tonne.
China spot iron ore traded at $ 218 a tonne on Thursday, down $ 2 from last week, according to SteelHome advisory data SH-CCN-IRNOR62.
dalian coking coal DJMcv1 lost 1.3%, while coke DCJcv1 fell 1.4%, extending losses into a fifth day.
“China will need to cut its (steel) production by more than 50 million tonnes in the last six months of this year to meet its carbon emissions targets,” said John Meyer, analyst at the brokerage firm. and London-based corporate finance SP Angel.
“The risk for the Chinese government is that steel prices will continue to rise if supply is limited, threatening the government’s broader efforts to contain commodity price inflation,” he said. stated in a note.
Prices for steel and iron ore in China hit record highs in May as demand increased as the global economy recovered from the worst impact of the pandemic.
Prices retreated as Chinese authorities acted to slow a rally they attributed in part to speculative trading and seasonal weakness in domestic demand for steel.
Meanwhile, steel mills in northwest China’s Gansu province have also started cutting production, analysts at Sinosteel Futures said, after saying steel mills in Anhui province had to produce. less this year.
Structural steel bars on the Shanghai Futures Exchange SRBcv1 fell 1.3%, while hot-rolled coils SHHCcv1 fell 1.4%, after a rally of seven sessions. Stainless steel SHSScv1 slipped 2.8%.
(Reporting by Enrico Dela Cruz in Manila, editing by Sherry Jacob-Phillips)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.