In a harsh warning to iron ore bulls, the most-active May iron ore contract on the Dalian Commodity Exchange fell by CNY 114 per tonne or 9.8% to close the session at CNY 1,031 per DMT as anti-pollution restrictions in China’s top steelmaking city of Tangshan pressured iron ore prices.
Benchmark physical 62% Australian iron ore fines also crashed by USD 9.93 per tonne or 5.7% to USD 164.41 per tonne CFR Qingdao Physical steel prices in China have rebounded after last month’s Lunar New Year holidays, boosting demand for iron ore but operating restrictions in Tangshan placed downward pressure at least sentimentally for the time being.
The seaborne iron ore market is exhibiting strong volatility as expectations of robust steel demand during the spring months of April and May clashed with concerns about reduced iron ore consumption due to operating restrictions in Tangshan.
Under the emergency response, mining, coal preparation, ports, logistics and other operations that involve the transportation of bulk raw materials and products are prohibited from using heavy trucks at or below the fourth national level of emissions.
Prior to latest announcement, the Tangshan government had initiated two rounds of Level II emergency response, with mandatory emission reduction measures on steelmaking companies, for periods across February 8-15 and February 23-March 5.