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China iron ore futures fall further as supply woes ease
[MANILA] Dalian iron ore futures extended losses into a third session on Wednesday as concerns about tight supply eased, while expectations of slower demand in China for the steelmaking raw material added to the downward pressure.
Worries eased about a global iron ore shortage that had sent spot prices to five-year highs and futures to record peaks in recent weeks, after Brazilian miner Vale SA resumed full operations at Brucutu mine.
Vale, the world's No 1 iron ore producer, said on June 19 that it would fully resume Brucutu operations within 72 hours, after an appeals court overturned an earlier ruling that halted processing amid concern about the safety of a nearby dam.
"The mine was fully restarted on Saturday and should be back to 100 per cent capacity relatively quickly," ANZ Research said in a note.
The most-actively traded September iron ore contract on the Dalian Commodity Exchange dropped as much as 2.1 per cent to 789 yuan (S$155.22) a tonne, pulling away from its record high of 837 yuan hit on June 20.
Brucutu had operated at only a third of its capacity after it was shuttered in February as Vale's mine operations came under close scrutiny following the deadly Brumadinho dam collapse in late January.
Vale shut several dams and suspended some mining operations for safety checks, curbing iron ore supply to China, which makes half of the world's steel.
Additional downside pressure on iron ore prices was expected from output restrictions in some of the steelmaking hubs in China, which seeks to reduce persistently high industrial gas emissions, said SP Angel in London in a note.
China's top steelmaking city of Tangshan has imposed a new set of output curbs on steel producers, some of which will have to halve production until the end of July.
The output curbs continued to underpin steel futures in China, which rose for a sixth straight session on Wednesday.
The most-actively traded construction steel rebar, for October delivery, on the Shanghai Futures Exchange, rose as much as 1.2 per cent to 4,013 yuan a tonne in early trade, its highest since August 2011.
Hot-rolled coil, steel used in cars and home appliances, jumped as much as 1.1 per cent to a record 3,944 yuan a tonne.
Other steelmaking raw materials also traded higher, with Dalian coking coal up 0.7 per cent at 1,385 yuan a tonne as of 0245 GMT. Coke futures rose 1.5 per cent to 2,104 yuan.