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Iron ore falls to two-week low after China reiterates steel output control

Iron ore futures slipped to a two-week low on Thursday, undermined by fears of falling demand in top consumer China after Beijing reiterated its stance on continuing to control crude steel output in 2024.

The most-traded September iron ore on China’s Dalian Commodity Exchange (DCE) ended afternoon trade 2.37% lower at 865 yuan ($119.33) per metric ton, the lowest since May 16.

The benchmark July iron ore on the Singapore Exchange was 2.85% lower at $115.55 a ton as of 0705 GMT, also its lowest since May 16. It fell as much as 3.35% earlier in the session.

China aims to reduce carbon dioxide emissions of key industries by an amount equivalent to about 1% of the 2023 national total, a government plan released on Wednesday said, reiterating a control on production of metals.

In April, China’s state planner said the government will continue to manage crude steel output in 2024. Beijing started to cap steel output from 2021 to limit carbon emissions.

“It remains unclear whether steel output this year will be flat on year or be lowered; such details are worth monitoring further,” analysts at Sinosteel Futures said in a note.

Other steelmaking ingredients on the DCE fell, with coking coal down 2.01% at 1,679.5 yuan ($231.70) a ton and coke dipping 0.26% to 2,334.5 yuan ($322.06).

Steel benchmarks on the Shanghai Futures Exchange (SHFE) were mixed.

Rebar weakened 0.08% to 3,737 yuan ($515.55) a ton, hot-rolled coil fell 0.1% to 3,863 yuan ($532.93), while wire rod SWRcv1 rose 0.33% to 3,985 yuan ($549.76) and stainless steel SHSScv1 was flat at 14,685 yuan ($2,025.91).

“There are expectations that steel fundamentals will improve following the release of government plan on Wednesday, lifting steel prices,” analysts at Hongyuan Futures said in a note.
Source: Reuters (Reporting by Cassandra Yap and Amy Lv; Editing by Sohini Goswami and Varun H K)

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