Prices of steelmaking ingredients on the Dalian Commodity Exchange slipped on Monday due to sluggish demand at mills stemming from locally mandated output cuts, while Beijing’s coal price controls also weighed on sentiment.
Steel, cement and coking plants in the steel hub of Tangshan city were recently ordered to cut production following a heavy-pollution alert, according to the local government.
Stocks of imported iron ore at China’s ports gained by 2.1 million tonnes to 142.3 million tonnes last week on weakening demand, data from SteelHome consultancy showed.
Benchmark iron ore futures on the Dalian bourse DCIOcv1, for January delivery, ended down 5.7% to 619 yuan ($96.68) per tonne.
Other steelmaking raw materials also declined after the state planner said the coal supply situation had improved significantly, and it would launch an online platform in early November to monitor the implementation of long-term coal contracts.
Dalian coking coal futures DJMcv1 plunged to their daily trading limit in afternoon session, down 9% to 2,165 yuan a tonne.
Coke prices DCJcv1 slumped 6.8% to 2,898 yuan per tonne at close. They fell as much as 8.6% earlier during the session.
“Recently, affected by the government’s stringent control of coal prices, costs plunged and sent down steel prices,” analysts with Haitong Futures wrote in a note.
“In the short term, the impact from raw materials could be stronger than fundamentals.”
Construction-use steel rebar on the Shanghai Futures Exchange SRBcv1 fell 3.9% to 4,509 yuan a tonne.
Hot rolled coils futures SHHCcv1, used in the manufacturing sector, slipped 4.2% to 4,826 yuan per tonne.
Stainless steel futures on the Shanghai exchange SHSScv1, for December delivery, fell 2.0% to 18,860 yuan a tonne.