Australian miners hit by China steel output cuts

Posted on 12 October 2017

Source: Financial Times

Sydney-listed mining groups were taking a hit in Thursday trade as a drive to limit steel production in China during the winter continued to undermine demand for iron ore.

Shares in miner BHP Billiton were down as much as 1.7 per cent in morning trading, while rival Rio Tinto had dipped as much as 1.5 per cent. The materials segment of Sydney’s S&P/ASX 200 index was down 0.8 per cent while the broader index was flat.

Those falls came after futures contracts for key steel-making ingredient iron ore on China’s Dalian Commodity Exchange ended Wednesday down 1.3 per cent at Rmb434.5 ($65.93) per metric tonne, the lowest close in three and a half months. That was down 28.7 per cent from a peak of Rmb609.5 hit on August 22.

Beijing has ordered heavily polluting industries that operate in the smog prone provinces of Hebei, Shanxi and Shandong to reduce output and curb emissions over the winter heating season, a period that runs from October to March.

On Tuesday, benchmark Australian iron ore fines fell 4.1 per cent to a three-month low of $59.1 a tonne, according to a price assessment by The Steel Index, taking losses since the start of September to more than 20 per cent.

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