Iron Ore Halts Two-Day Gain as Steel Slides, BHP Mine to Open
(Bloomberg) -- Iron ore futures in Singapore halted a two-day rebound as Chinese steel prices extended declines amid further government curbs and BHP Group prepares to start one of the world’s biggest new mines.
BHP’s South Flank iron ore project in Western Australia will announce first production in the next few days, Chief Executive Officer Mike Henry said Tuesday. That will eventually add 80 million tons of annual supply at what he called a “perfectly timed” moment, given prices are near record levels.
The ore is holding above $200 a ton despite last week’s wild price gyrations, as investors eye the strength of China’s steel markets and a push by Beijing to cap commodity prices. Steel prices are weakening, with rebar and hot-rolled coil both resuming falls from all-time highs.
Also on Wednesday, the steelmaking hub of Tangshan announced fresh curbs, including ordering sintering units to stop work from midnight to 10 a.m., May 18-20, Mysteel reported. Its the latest in a series of measures targeting the city, which last week banned mills from fabricating or spreading price-hike information after Premier Li Keqiang earlier urged China to deal with surging prices.
The futures in Singapore fell 4.2% to $205.10 a ton by 3:25 p.m. local time, while futures on China’s Dalian exchange closed down 4%.
Iron ore rocketed to a record this month amid the booming steel markets in China and a recovery in global steel demand. Investors are watching for any signs that high prices spur a supply response from previously unprofitable mines. China said Tuesday it would encourage more domestic output to steady the market.
©2021 Bloomberg L.P.