Iron ore futures on the Dalian and Singapore exchanges fell for the fourth straight session on Wednesday, trading close to $100 a tonne, as electricity rationing in parts of China led to the closure. of steel mills.
The most-traded January 2023 iron ore contract on the Dalian Commodity Exchange dropped 4.4% to 683.50 yuan ($100.87) a tonne, the lowest since July 28.
On the Singapore Stock Exchange, the steel ingredient’s September contract fell 4.7% to $100.70 a tonne.
Analysts said a heat wave hitting several parts of China, the world’s biggest steel producer, since mid-July has caused power shortages, forcing authorities to ration electricity.
In southwest China’s Sichuan province, authorities began limiting electricity supplies to homes, offices and shopping malls on Wednesday.
Nearly 20 steel mills in China’s southwest regions suspended operations on Wednesday, according to steel industry data provider SMM.
Power rationing is expected to continue for a week, SMM said.
“Our base case is that the energy rationing this time is likely to be milder than what was seen last year in terms of duration and scale,” JP Morgan analysts said in a note, adding that the problem is likely to be localized in a few provinces. .
The increase in iron ore supply in China also weighed on prices, analysts said.
Inventories of imported iron ore at Chinese ports have risen steadily over the past seven weeks, reaching 138.6 million tonnes on 12 August, the highest level since mid-May, according to data from consultancy Mysteel.
Source: CNN Brasil