Iron ore prices fell after China reported a drop in the country’s steel production in August.
China produced 83.24 million tonnes of crude steel in August, a 13.2% drop from the same period a year ago, according to data released by China’s National Bureau of Statistics on Wednesday, as the country curbed its steel industry to cut emissions.
Output curb until end of year
It was the lowest level since March 2020, according to analysts at ANZ Research on today’s note.
“These constraints are expected to remain through the end of the year as provinces look to hit targets on emission,” according to ANZ Research.
ANZ Research analysts forecast that Beijing’s increased environmental scrutiny could slow steel production, which grew 11.8% in the first half of 2021.
Steel output set to fall
“With China’s plans to limit production to last year’s level, we see output falling by 11% y/y in the second half of 2021,” ANZ Research wrote, adding that it may result in loss of 87 million tonnes of iron ore demand.
Steel prices are likely to remain high, as Beijing curbs output while supporting economic growth via further infrastructure spending, it added.