Iron ore prices climb as China orders temporary steel mill shutdowns
&imwidth=600&imheight=450&format=webp&quality=medium "Iron ore prices climb as China orders temporary steel mill shutdowns")
Piles of imported iron ore are seen at a port in Zhoushan, Zhejiang province, China. Photograph: (Reuters)
Iron ore prices rose in Asian trade as Chinese mills prepare to halt production to reduce air pollution for a military parade.
Amid US tariffs pressure, the iron ore prices rose in Asian trade on Monday after reports that several Chinese steel mills will temporarily halt production later this month to curb air pollution ahead of a key national event. According to a report by consultancy Mysteel, cited by Bloomberg, authorities have instructed some mills in Tangshan, China’s top steel-producing hub to stop operations from August 25. The move aims to ensure cleaner air for the September 3 military parade in Beijing, which is located nearby.
Production cuts seen as market positive
As per Bloomberg, futures for iron ore in Singapore gained as much as 1.6 per cent, extending a 2.1 per cent rise last week. Atilla Widnell, managing director at Navigate Commodities, told Bloomberg that such production cuts are being interpreted positively by domestic markets. Higher steel prices and improving profit margins, he said, are easing pressure on mills facing elevated costs. Widnell said that “Steel-production cuts have counter-intuitively been digested as a positive by onshore markets, given that increasing steel prices and margins are relieving pressure on a heavily suppressed cost base," as quoted by Bloomberg.
Iron ore has been edging higher since the start of the year, with Beijing’s broader campaign against industrial overcapacity dubbed “anti-involution," supporting prices of steel and other industrial materials, as reported by Bloomberg. The policy has also boosted profitability at mills that have struggled with thin margins in recent years.
Metals rally extends beyond iron ore
As of 11:12 a.m. Singapore time, iron ore futures in Singapore were up 1.4 per cent at $103.50 a ton. Yuan-denominated contracts in Dalian also gained, alongside steel prices in Shanghai, as per Bloomberg.
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On the London Metal Exchange, most industrial commodities traded higher. Copper rose 0.2 per cent to $9,783 a ton, marking its fourth consecutive daily increase, Bloomberg data showed.
(With inputs from the agencies)