Iron ore price slump widens as China demand concerns mount

The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trading 3% lower at 810.50 yuan ($112.70) per metric ton, after earlier hitting 808.50 yuan, its weakest since July 12.

On the Singapore Exchange, the steelmaking ingredient’s benchmark September contract was down 4% at $99.70 per metric ton, as of 0803 GMT, after touching $99.40, its lowest since June 29.

Prices of other steelmaking ingredients also fell, with losses on the Dalian exchange widening during afternoon trading amid market chatter about steel output curbs in China.

The flooding in Hebei from record rainfall added to market worries about local steel production.

Coking coal and coke sank 5% and 6.2%, respectively.

“There have been renewed production curbs, which are likely to be more effective given unattractive steel mill margins,” ANZ analysts said in a note.

Steel mills in Yunnan province have been asked to prepare to cut back production to meet a government mandate on capping 2023 output at last year’s level, according to some Chinese consultancies.

“Limited signs of fresh policy stimulus and ongoing weakness in residential property markets in China” weighed on sentiment, Westpac analysts said in a note.

Some Chinese city governments have made it harder for developers to access tens of billions of dollars from property sales held in escrow accounts, Reuters reported, citing people familiar with the matter.

The tightening appears to run contrary to Beijing’s assurance that it will help stabilise the sector.