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Consultancy Reveals That Chinese Steelmakers Are Set to Halt Production at the End of August, Driving Prices and Expectations in the Global Iron Ore Market
Iron ore prices rose after a Chinese consultancy reported that steelmakers have been ordered to temporarily halt production. The measure begins at the end of this month and aims to reduce air pollution. The cut will take effect from August 25, coinciding with preparations for the military parade on September 3 in Beijing.
According to Mysteel, plants in the Tangshan region have been notified about the shutdown. The steelmaking center is one of the most important in the country.
The most important thing is that, according to the report, this temporary pause aims to ensure cleaner air during the military event.
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Júnior Friboi has just purchased one of the largest feedlots in all of Brazil, located in Goiás, with the capacity to produce 180,000 cattle per year, and the manager has already come forward to reassure employees about layoffs.
Immediate Impact on Prices
Iron ore futures contracts in Singapore rose by up to 1.6% on the day, following a cumulative gain of 2.1% in the previous week.
Analysts interpreted the news as positive for the domestic market, as the supply reduction could support prices and margins.
For Atilla Widnell, managing director of Navigate Commodities, the rise in prices and profit margins in steel helps alleviate cost pressures for steelmakers, who have been operating under significant financial strain.
Campaign Against Excess Capacity
Since the beginning of the year, iron ore has seen moderate gains. In recent weeks, the Chinese campaign against excess capacity — known as “anti-involution” — has raised prices for industrial products and improved the performance of struggling companies.
This movement reinforces the expectation that production control measures may support the market. Additionally, the sector is closely monitoring the evolution of environmental policies, which directly impact supply.
Industrial Metals and Real Estate Market
On the London Metal Exchange, performance was mixed. Copper fell 0.3%, closing at US$ 9,731.50 per ton. Aluminum also declined, while nickel rose slightly.
Meanwhile, authorities have lifted some restrictions on property purchases in Beijing. The change could stimulate demand for new construction, increasing consumption of steel and, consequently, iron ore.
The Chinese real estate sector, even under pressure from debt, remains an important pillar for demand for the mineral in the country.
With information from Investnews.
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