Iron ore prices have taken a nosedive on worries about China’s rising output amid its falling steel output as the country restricts its steel industry to cut emission.
Iron ore futures on the Singapore Exchange dropped by 1.68% to $92.35 a tonne on Friday. The price had dropped from the $120 level in early October and a record high of above $200/tonne in May. Spot iron ore fell by 2.19% to $97.17 on Thursday.
Concerns over more domestic supply rose after China’s top economic planning committee, the National Development and Reform Committee called for support of the country’s iron ore development, analysts at ANZ Research wrote in a note on Friday.
Iron ore price has been under pressure as China’s steel production dropped following Beijing’s pledge of limiting steel output to below one billion tonnes in 2021 to cut emission. During the power crisis, the Chinese government also ordered steel producers to reduce production to ease pressure on the country’s power grid.
China’s steel production fell by 13% year-on-year to 243.8 million tonnes in the third quarter of this year, according to data compiled by ANZ Research. But high frequency data suggests the fall accelerated in October.