Iron ore dropped below $100 a ton for the first time in over five weeks on signs that the crisis in China’s steel industry is worsening.
Steel production in the key center of Tangshan will fall by more than 8 million tons in the second half due to plans to restrict output, Minmetals Futures said in a note on Tuesday. The hub produced about 75 million tons in the first six months, according to Mysteel.
Major China Steelmaker Sees Limited Relief for Troubled Industry
Output in China’s vast steel sector is already running well behind last year’s pace as the industry reels from a property crisis that shows no signs of abating. Authorities in Tangshan, near Beijing, decided to cut production at a recent meeting, Mysteel said in a report last week. Major mill Angang Steel Co. has said it sees tough conditions persisting through the end of the year.
The steel-making ingredient has fallen over 7% so far this week as it heads for a fifth straight monthly drop. Stimulus measures announced by the government have yet to arrest the decline amid a slowing economy. Chinese banks are facing losses as mortgage boycotts sweep the property sector, which is crucial to steel demand, while economists turn more bearish on their growth forecasts for the country.
