- China is limiting the production of steel to restrict its greenhouse emission as a part of its long-term goal to become carbon-neutral.
- The prices of iron ore are trading slightly above the nine-month low levels on the back of lower demand from steel industries.
- The country’s factory activity slipped for the first time in August due to COVID-19 restrictions.
Iron ore prices tumbled sharply on expectation over curbing the production of steel production in China for the remaining year. The steel mills in the country have not relaxed the production of steel, a move to limit greenhouse emissions.
The prices of Iron Ore Fine China Import 63.5% grade closed 7.03% down at US$145.5 per tonne on Wednesday. The prices of the base metal used for the production of steel are trading at slightly above the nine-month low levels of US$139.5 per tonne.
The iron ore prices tumbled more than 30% since the record high level of US$230 per tonne in May amid an improved supply outlook and steel production curbs in China. Apart from this, the country's factory activity also slipped into contraction during August for the first time in the last 1.5 years on the back of COVID-19 restrictions, high raw material prices, and supply bottlenecks.
Iron ore prices dropped more than 7% on Wednesday on expectations that China’s steel production would remain low in the remaining 2021.