Iron ore futures dipped on stricter emission cuts in steelmaking hub of Tangshan, imposed by Chinese environment ministry.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then slid by 3.50% day-on-day or up RMB 37.50 to RMB 1,035/mt on Monday.
The steel rebar contract on the Shanghai Futures Exchange, however managed to rise slightly by 0.63% or RMB 30 day-on-day to RMB 4,787/mt.
Stricter environmental curbs in Tangshan
Tangshan, the steelmaking hub of China had been subjected to strict sintering cuts around 50% to comply with environmental regulations.
As the surrounding steel mills came under greater scrutiny from the Ministry of Ecology and Environment for failing to adhere to emission levels during the Two Sessions meetings.
Thus, some trade participants expected more output cuts in near term and slowed their iron ore procurement activities in waiting for further updates from the Chinese authority.
However, the steel margins remained healthy, which supported the demand for medium to higher grade fines among mills.
Higher investments for China’s real estate and infrastructure in Jan-Feb 2021
The demand for construction steel products is expected to be high as China’s fixed asset investment grew 35% on-year to RMB 4.52 trillion or $695 billion during the Jan-Feb 2021 period.
Likewise, the investment of property market also hiked up by 38.3% on-year over Jan-Feb 2021 period, according to National Bureau of Statistics.
Following the strong investments in China’s real estate and infrastructure, Chinese mills had ramped up pig iron output to 144.8 million mt, up 6.4% on-year for Jan-Feb period to keep pace with high steel consumption.