BEIJING,
July 3 (Reuters) - Dalian
and Singapore iron ore futures slipped on Monday as traders became cautious of faltering
demand after China's top steelmaking hub Tangshan ordered local steel mills to
reduce production in a bid to improve air quality.
The municipal
government of north China's Tangshan asked the 11 A-class steel mills to take
initiative to cut production, while mills rated as B-class or below need to
suspend 50% of their sintering equipment over July 1-31, analysts at
consultancy Mysteel said in a note.
There were no
statements on the websites and wechat accounts of Tangshan's relevant
governments. The municipal bureau of ecology and environment did not
immediately respond to a request for comments.
A-class mills cut
production by 30% while the rest cut their sintering production by 50%, Mysteel
said, adding that many local mills have abundant sintered ore inventory to
sustain production for around 20 days.
Meanwhile,
an accident at an iron ore mine in northern China has
raised concerns that Beijing could order wider safety checks on mines,
disrupting domestic iron ore supply.
The most-traded
September iron ore on the Dalian Commodity Exchange (DCE) DCIOcv1 ended
morning trading 1.92% lower at 817 yuan ($112.81) a metric ton.
The benchmark August
iron ore SZZFQ3 on
the Singapore Exchange was 1.3% lower at $107.65 a metric ton, as of 0330 GMT.
Market
chatter about government intervention in the iron ore market and crude steel
output reduction policy in 2023 were weighing on sentiment as well. No official
statements were seen.
Other steelmaking
ingredients similarly weakened, with coking coal DJMcv1 and coke DCJcv1 on the DCE down 1.45% and 1.75%, respectively.
Steel benchmarks on the
Shanghai Futures Exchange posted losses on lower raw materials costs and
seasonally slow demand.
Rebar SRBcv1 lost
0.35%, hot-rolled coil SHHCcv1 shed 0.29%, wire rod SWRcv1 dropped
0.28%.
"Steel prices had
swung up and down between strong stimulus expectations and weak reality
previously; many regions have recently been hit by either rains or high
temperature, curbing downstream demand further," analysts at Sinosteel
Futures said in a note.