The most-traded iron ore on China’s Dalian Commodity Exchange ended daytime trading 2.2% lower at 838 yuan ($129.36) a tonne, wiping out gains made in the previous session.
China, which accounts for more than half of the world’s steel output, is seeking to limit its full-year production to no more than the 2020 volume in order to cut emission levels, but the restrictions imposed on mills are set to be extended beyond this year.
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Authorities in the steel production hub Tangshan city in Hebei province have issued an air quality control plan for the Beijing Winter Olympics in February, imposing ultra-low emission standards across the steel and power sectors until March.
“The continued tightening of Hebei’s production limit means that the country’s crude steel production will fall more than previously expected,” Sinosteel Futures analysts said in a note.
As steel production restrictions have begun since July and signs of slowing Chinese economic activity emerged, spot iron ore prices also hit a more than four-month low this week at below $170 a tonne, SteelHome consultancy data showed.
Stainless steel futures were the only gainer in China’s ferrous metals complex, with the most-traded September contract rising 1.4%, underpinned by strong demand and as prices of key raw material nickel surged on supply worries.
(With files from Reuters)