Dalian iron ore was set on Friday for its steepest weekly drop in 17 months, as China’s intensified drive to lower steel output prompts mills to start cutting production to avoid sanctions.
The most active September contract on China’s Dalian Commodity Exchange has fallen roughly 10% from last week, its biggest weekly drop since February 2020, and is now off 17% from a record peak touched in May.
Iron ore’s most-traded August contract on the Singapore Exchange dipped 0.2% to $197.25 a tonne.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $201.33 a tonne on Friday, down 0.5% from Thursday’s closing.
China has stepped up efforts to reduce output of the construction and manufacturing material in line with its carbon emission reduction goal.
Authorities have asked steel mills to ensure their output this year will be no more than 2020 volumes, after first-half production rose roughly 12% from the same period last year.
