The prospect of much lower steel production in the second-half is “testing the bullish resolve of the futures markets”, BHP wrote in a commodities outlook report on its website. Iron-ore in Singapore has plunged by a third since spiking to an all-time high in May.
China’s steel industry is under pressure after pledging to reduce output this year, a goal that requires huge second-half curbs to offset booming output earlier in 2021. Production in July was more than 8% lower year-on-year, data on Monday showed.
Futures in Singapore fell 2.4% to $154.45 a ton by 12:37 p.m. local time, and are heading for a fifth weekly loss. In China, futures dropped 1.2% to head for their lowest close since November.
While investor attention is very focused on China’s output curbs in the second half, the nation’s demand trends will also be critical. Beijing is pushing a range of measures to control the property sector, which accounts for big chunk of steel usage and has traditionally helped drive surges in iron-ore prices.
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