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Iron ore futures were mixed on Wednesday, with prices in Singapore rebounding modestly, while the steelmaking ingredient’s Dalian benchmark extended losses after a China steel industry group urged producers to curb output to keep themselves afloat.
Steel prices in China have sunk in the wake of a disappointing pace of recovery in demand after Beijing removed COVID-19 restrictions and rolled out measures to support the struggling domestic property sector.
Weak prices pose severe challenges to steel mills, the China Iron and Steel Association said at a meeting with several steelmakers on Monday, urging them to cut output to help ensure a stable cash flow.
Iron ore’s benchmark May contract on the Singapore Exchange SZZFK3 was up 0.4% at $102.85 a tonne, as of 0427 GMT, after earlier hitting $99.90 a tonne. It has fallen 22%, however, from a peak of $132 on March 15.
In contrast, the most-traded September iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended morning trade 0.6% lower at 715 yuan ($103.28) a tonne. Earlier in the session, it hit 698 yuan, its lowest since Dec. 8.
Even if demand for steel products in China improves in the future, iron ore will remain weak “for a long time” because of the government’s policy to curb output, Huatai Futures analysts said in a note.
China is considering limiting its steel output this year, according to analysts and recent unconfirmed reports, extending a two-year-old policy aimed at curbing emissions by the world’s largest steel producer.
Mills were seen ramping up production in recent weeks ahead of output caps.
On the Shanghai Futures Exchange, rebar SRBcv1 slipped 0.1%, hot-rolled coil SHHCcv1 shed 0.4% and stainless steel SHSScv1 dipped 0.3%, while wire rod SWRcv1 climbed 1.9%.
Coking coal DJMcv1 and coke DCJcv1 on the Dalian exchange dropped 2% and 1.5%, respectively.