Dalian iron ore climbs up on power curbs

September 28, 2021 12:35 PM AEST | By Arpit Verma

Dalian iron ore climbs up on power curbs — Image source: Source: © Lkeskinen0 | Megapixl.com

Who is driving the iron ore rally?

The ongoing iron ore rally is being driven by China's goal to restrict its greenhouse emissions. The country aims to attain carbon neutrality by 2060. Given the same, it is limiting its steel and aluminium production output.

Good Read: Iron ore tumbles on expectations of steel production curbs in China

The authorities of the country put a cap on steel production to bring down the inflationary pressure in the commodity market. Apart from this, investors are also tensed with a slump in the country's construction sector. The sales in the Chinese property market tumbled as much as 20% y-o-y in August. Additionally, Evergrande's financial crisis has also added fear among investors, ultimately reducing the demand for base metals in the country.

On the flip side, recent gains in steelmaking ingredients have recorded a bounce back from previous losses but it is not enough to balance the losses faced by iron ore, amid subdued demand at the mills.

Bottom Line

Iron ore prices gained significantly due to power cut issues in several parts of China and on strict government regulations to limit the use of coal, as a part of the country's goal to reduce greenhouse emissions.

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