Iron ore prices plunged in Asia on mounting concerns about demand from China, the world’s biggest iron ore buyer, as the country was stepping up curb on its steel production to cut emission.
Iron ore futures on the Singapore Exchange traded 6.42 % lower at $95.20 a tonne on Monday.
Rising risks of a substantial slowdown in property following a debt crisis that entangled Chinese property firm, Evergrande, aided the bearish sentiment, analysts at ANZ Research wrote on its Monday’s note.
On the steel production, ANZ Research noted that another province, Yunnan, was targeted last week with mill producers tasked to restrict output on steel, aluminium, and other materials.
“There were also rumours that the central government is asking mills to bring production back to 2020 levels by November instead of December,” ANZ Research noted.
“Rationed power demand is another pressure building up for smelters,” it added.
China’s crude steel output dropped by 13.2% to 83.24 million tonnes of crude steel in August, from the same period a year ago, according to data released by China’s National Bureau of Statistics last week. Steel production fell by 10.1% to 108.8 million tonnes in August, year-on-year.
The drop in China’s steel output in August was signalling that the plan to flatten steel production this year will be strictly implemented, ANZ Research said.