Iron ore selloff accelerates as China cuts steel output

Bejing

FUTURES in Singapore tumbled 10 per cent and are trading at the lowest in eight months on expectations that Chinese steel output and consumption will weaken over the rest of the year.

Prices are now down more than 40 per cent from the record reached in mid-May.

China has repeatedly urged steel mills all year to reduce output to cut back on pollution, with a drop in July's production signalling that measures are starting to take effect.

Some major producers have already made arrangements to reduce supply, while miner BHP Group said this week that the increasing likelihood of stern cuts this half is "testing the bullish resolve of the futures markets".

Iron ore's slump has spilled over to steel, with prices falling on expectations that Chinese demand will wane.

"Steel prices globally have started to cool as we expected, and we hold on to our view that there will be further easing of prices for the remainder of 2021 and into 2022 as Chinese demand from the construction industry weakens," said Fitch Solutions. BLOOMBERG