Exchange prices for iron ore in Dalian, China, fell to their lowest level in the last six trading sessions on Tuesday, under pressure from slowing demand due to tightening production restrictions on steelmakers in Tangshan, China's main steelmaking city.
Ore with 62 percent iron for September delivery fell 1.7 percent to 880 yuan (about $ 128) a tonne. At the start of trading, quotes fell 2.4 percent to 874 yuan.
Concerns over demand from the steel industry outweighed supply concerns as market participants ignored news that Vale SA's second-quarter iron ore production fell nearly 34 percent from last year.
Vale, the world's largest exporter of iron ore, said Monday that its production declined in the second quarter as many of its main dams remained closed or partially closed after the damaging dam in January.
“Investors have pondered the impact of further restrictions on China’s steel industry,” ANZ Research said in a statement, citing Tangshan’s latest notice of restrictions on steel production.
Tangshan authorities stepped up pollution control measures from July 21 to July 31, aiming to achieve their air quality targets, even resorting to the arrest of the head of one of the enterprises who did not want to cut steel production by 50 percent, as ordered by the government.
Steel mills with the cleanest emission level in the city's four-tier emission system and located in coastal regions will have to cut their operations by 20 percent over this period.
