Chinese iron ore hits near 5-month low as steel curbs hurt

BEIJING : Benchmark iron ore futures in China slumped more than 4per cent to their lowest since March 24, as increase in portside inventories and curbs on steel production weighed on prices.

Iron ore inventories at 45 ports in China increased by 260,000 tonnes last week to 127 million tonnes, data from Mysteel consultancy showed.

The gain comes amid intensifying controls on crude steel production across the country to meet its annual target of no higher output than 2020, this year.

"In the short term, iron ore demand and supply did not worsen significantly, prices fell but are still at high levels," analysts with Huatai Futures wrote in a note.

However, with government stepping up steel output cuts, iron ore could face increasing pressure, it said.

The most-actively traded iron ore futures on the Dalian Commodity Exchange, for January delivery, fell as much as 4.6per cent to 806 yuan (US$124.36) per tonne. They declined 2.4per cent to 824 yuan by 0330 GMT.

Spot prices of iron ore with 62per cent iron content for delivery to China was unchanged at US$162 a tonne on Tuesday, according to SteelHome consultancy.

Other steelmaking ingredients were mixed, with Dalian coking coal inching up 0.1per cent to 2,193 yuan a tonne, while coke futures fell 1.9per cent to 2,850 yuan a tonne.

FUNDAMENTALS

* Construction rebar on the Shanghai Futures Exchange dropped 3.3per cent to 5,165 yuan a tonne.

* Hot rolled coils lost 2.5per cent to 5,519 yuan per tonne.

* Stainless steel futures on the Shanghai bourse dipped 0.3per cent to 18,260 yuan a tonne.

* China is facing a high profile test of its commitment to curbing industrial pollution after steel output surged in the first half of the year to well beyond its target of capping production at 2020's peak, sending emissions to new highs.

(US$1 = 6.4812 Chinese yuan)

(Reporting by Min Zhang and Shivani Singh; editing by Uttaresh.V)