China: Dalian iron ore tumbles 10% as Tangshan curbs steel output

Dalian, SGX iron ore benchmarks sink to 4-week low; Tangshan restrictions dim iron ore demand outlook

Dalian iron ore futures fell by the 10% daily limit on Tuesday as anti-pollution restrictions in China's top steelmaking city of Tangshan crushed hopes of a pickup in demand for the raw material.

May iron ore on the Dalian Commodity Exchange ended daytime trading at 1,031.50 yuan ($157.98) a tonne, shortly after tumbling 10% to 1,031 yuan, its weakest since Feb. 9.

Iron ore's front-month contract on the Singapore Exchange slid 7% to $155.65 a tonne, also the lowest since Feb. 9.

Tangshan in the smog-prone northern Chinese province of Hebei, which accounts for a quarter of steel output in the world's top producer of the manufacturing and construction material, issues pollution alerts from time to time restricting mills' operations.

While physical steel prices in China have rebounded after last month's Lunar New Year holidays, boosting demand for iron ore, "operating restrictions in Tangshan placed downward pressure at least sentimentally for the time being," said Richard Lu, a senior analyst at CRU consultancy in Beijing.

Spot iron ore bound for China traded at $176 a tonne on Monday, near a peak of $179.50 hit last week, the highest level on record since 2012, based on SteelHome consultancy data available on Refinitiv Eikon screen.

"The market is exhibiting strong volatility" as expectations of robust steel demand during the spring months of April and May clashed with concerns about reduced iron ore consumption due to operating restrictions in Tangshan, Lu said.