Futures prices for iron ore reached CNY 680 per ton on Wednesday, marking a drop to the lowest level in a week. This price decrease is due to expectations of production restrictions in the major steelmaking hubs in Hebei province, particularly in the cities of Tangshan and Handan. These two cities are currently under air pollution control measures for the autumn and winter season, which has led to adverse weather conditions and disruptions in sintering operations and the use of electric arc furnaces.
Predictions of Further Steel Production Restrictions
Expectations for further steel production restrictions in Hebei are rising, which could put additional pressure on steel production. Industrial data shows that the average hot metal production among Chinese steelmakers, a key indicator of iron ore demand, continues to decline. This downward trend in hot metal production reduces the need for iron ore, consequently negatively impacting the price of this mineral.
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Significant Decline in Global Iron Ore Shipping
Meanwhile, the volume of global iron ore shipping in the week ending November 8 has decreased to 29.91 million tons, representing a drop of 5.57 million tons. Additionally, shipments from Australia and Brazil have also decreased by 3.84 million tons, reaching 24.06 million tons. This reduction in shipping volume further fuels the decline in demand and price for iron ore.
Amid these developments, the iron ore market is affected by weak demand and production restrictions in China. Given these conditions, it is expected that iron ore prices will remain under pressure in the short term.
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