(Bloomberg) — Iron ore expanded its slump to below $100 a ton as China stepped up restrictions on industrial activity in some provinces.
Singapore futures plunged as much as 12% on Monday, before quickly capping losses. Prices have plunged about 60% since a record high in May, trading below three digits for the first time in more than a year, as Chinese demand dwindles.
The world’s largest steelmaker is stepping up steel production restrictions to meet a lower-volume target this year, while continuing its commitment to be carbon neutral by 2060. More recently, the restrictions have focused on improving air quality for next year’s Winter Olympics.
Measures are already starting to take effect. Production fell in early September after falling to a 17-month low in August.
“We expect another drop in weekly Chinese steel production, which will again undermine iron ore prices,” said Atilla Widnell, general manager of Navigate Commodities. Weekly shipments from Australia are also up week-to-week, and Brazil’s exports were strong, he said. The research firm has a short-term target of $94.41 to $98.28 per ton.
In the latest round of measures, factories in Jiangsu province have received instructions to cut production as part of wider restrictions on industrial activity aimed at lowering power consumption, Mysteel reported, citing his survey of operators. The cuts are concentrated between now and October 15 and focused on structural steel. Producers in Zhejiang Province are also being asked to limit their activities until September 30. Calls to Jiangsu and Zhejiang provincial information departments were not answered on a public holiday.
Read: Brutal collapse of iron ore below $100 marks more trouble ahead
China’s moves to curb its mammoth steel industry have shaken iron ore markets this year, with iron ore in the first half as factories rushed to preload their steel volumes before more production restrictions were introduced. Prices have also been ravaged by a downturn in the real estate sector and could further weigh the turmoil at developer China Evergrande Group on a crucial source of demand for steel and metals.
Futures were down 6% at 11:51 a.m. local time at $95.60. Prices have fallen for a ninth day on their way to the longest streak of losses since 2015. Markets in China are closed for the holidays. Miners’ shares also plummeted, with BHP Group losing 4.2%, Rio Tinto Group losing 3.8% and Fortescue Metals Group Ltd. 4.6% lost.
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