The price of iron ore rose after a Chinese consulting company reported that authorities had ordered several steel mills to temporarily suspend production at the end of August. The main reason for this decision was allegedly problems with air pollution.
Bloomberg writes that steel futures rose 1.6% in Singapore after a 2.1% weekly gain. On August 9, Mysteel published a report stating that some factories in Tangshan, the center of the country's steel industry, received a notice to stop production from August 25 to ensure clean air during the military parade.3 September.
"The reduction in steel production, contrary to intuition, was perceived as a positive factor in domestic markets, given that rising steel prices and margins are reducing pressure on heavily restrained costs," said Atilla Widnell, Managing Director of Navigate Commodities Ltd.
Meanwhile, the authorities have lifted some restrictions on the purchase of real estate in Beijing, which may improve the demand for housing in the capital and, as a result, the consumption of materials for steel production. Real estate development in China has been a key source of demand for iron ore, and problems in this debt-ridden sector have put pressure on prices.
Iron ore prices have increased slightly since the beginning of the year. In recent weeks, a widespread campaign against overcapacity in China has led to higher prices for manufactured goods and improved profitability of steel mills.
Futures rose 1.4% to $103.50 per tonne. Contracts priced in yuan have also increased in Dalian, as has steel in Shanghai. Prices also rose slightly on the London Metal Exchange. Copper rose 0.1% to $9,774.50 per ton, marking the fourth consecutive day of growth.
