Posted on 05 Jul 2021
Benchmark Dalian iron ore headed for its second consecutive weekly fall on Friday, though it eked out a slim gain in a volatile session, as top steel producer China steps up efforts to curb output to meet its carbon emissions goal.
The most-traded September iron ore on China’s Dalian Commodity Exchange was 0.8% higher at 1,182.50 yuan ($182.41) a tonne by 0700 GMT, after earlier falling by up to 2.6%.
The steelmaking raw material’s most-active August contract on the Singapore Exchange slipped 0.1% to $204.70 a tonne.
“China will have to cut (steel) output by more than 50 million tonnes in the final six months of this year to meet its carbon emissions targets,” said John Meyer, analyst at London-based broking and corporate finance firm SP Angel.
China’s crude steel output hit a monthly record high of 99.5 million tonnes in May, bringing its January-May output to 466.3 million tonnes, up 13% from a year ago – despite its goal of a lower output this year than in 2020.
“The risk for the Chinese government is that steel prices will continue to surge higher if supply is constrained, threatening the government’s broader effort to contain commodity price inflation,” Meyer said in a note.
Steel and iron ore prices in China hit record highs in May on robust demand, but have pulled back as Chinese authorities acted to cool a rally partly attributed to speculative trading, and due to a seasonal weakness in domestic steel demand.
Spot iron ore in China traded at $218 a tonne on Thursday, down $2 from last week and off 6.2% from its record peak, based on SteelHome consultancy data.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 and hot-rolled coil SHHCcv1 both dropped 0.6%, after a seven-session rally. Stainless steel SHSScv1 fell 3%.
Dalian coking coal DJMcv1 was steady, while coke DCJcv1 gained 0.7%.
Source:Reuters
