China’s iron ore futures dipped by nearly 1 percent on Thursday, as emergency anti-pollution measures in northern China dampened demand for steelmaking raw materials.

The Ministry of Ecology and Environment said late on Wednesday that it expects a bout of severe smog to blanket regions in northern China, including top steelmaking province Hebei and coal mining hub Shanxi, from Jan. 10-14.

Some cities have issued smog alerts and asked heavy industry to restrict production, particularly the use of sinter plants, during the forecast pollution period.

Sintering is a highly pollutive process that melts iron ore before it is put into a blast furnace.

The most-active iron ore futures on the Dalian Commodity Exchange fell 0.9 percent to 508 yuan ($74.50) a tonne as of 0141 GMT.

Stocks of imported iron ore at Chinese ports has risen to 140.6 million tonnes, as of Jan.7, its highest level in seven weeks, data compiled by SteelHome showed. [SH-TOT-IRONINV]

“Iron ore prices could be volatile in the near-term due to restrictions on sintering plants,” analysts at Huatai Futures said in a note.

“But there will still be some support for prices as steel mills are expected to replenish their stocks ahead of Chinese new year in February, while shipments from overseas miners may fall in the coming weeks.”

Other steelmaking raw ingredient also eased on Thursday, with Dalian coking coal down 0.4 percent to 1,186 yuan a tonne and coke futures down 1.5 percent to 1,933 yuan.

Benchmark steel rebar prices on the Shanghai Futures Exchange dipped 0.2 percent to 3,517 yuan a tonne as investors remain cautious after three-day trade talks between China and the United States wrapped up on Wednesday.

China’s commerce ministry said the talks were extensive and detailed, and established a foundation for the resolution of each others’ concerns.

 

Source: reuters.com

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