Iron ore futures plunged at the close, after a new round of output curb implemented in Tangshan to comply with stricter environmental regulations.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then nosedived by 9.95% day-on-day or down RMB 114 to RMB 1,031.50/mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange also followed the market corrections and went down by 3.91% or RMB 187 day-on-day to RMB 4,592/mt.
New anti-pollution curb in Tangshan
DCE’s drop of almost 10% daily limit was attributed to production restriction in Tangshan under new stricter environmental curbs that reportedly shut down around 9 blast furnaces of grade D level mills.
It was estimated that the output cut will reduce pig iron production of around 49,900 mt per day in March, as of the total average output of 2.45 million mt per day in China, which may result in lowest pig iron output recorded since April 2020.
According to trade sources, the new measures will bring a total of around 15 blast furnaces under maintenance as of Mar 9, as 6-7 blast furnaces were scheduled for maintenances since last week.
Lower shipments from major miners in February
Seaborne iron ore shipments had decreased 8.35% on-week among major miners, according to Platts’ ship tracking cFlow data.
By the end of Feb 28, iron ore exports from Rio Tinto, BHP, Vale, Fortescue Metals Group, Roy Hill and Saldanha port in South Africa dropped to 19.93 million mt, lower than the average of 20 million mt level recorded last consecutive three weeks.
Among the exports, there were significant drops in iron ore shipment from Rio Tinto and Vale, which dropped to 4.69 million mt, down 32.25% on-week and 4 million mt, down 22.23% on-week, respectively.
The decreases were linked to shipping disruption in unfavorable weather conditions like cyclone threats off the coast of Western Australia and rainy season in Brazil.