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UPDATE 1-China steel, iron ore struggle to recover as smog hits demand
December 21, 2016 / 7:45 AM / a year ago

UPDATE 1-China steel, iron ore struggle to recover as smog hits demand

* Heavy smog blankets northern China for fourth day

* Tianjin port halts operations due to smog - traders (Updates prices)

By Manolo Serapio Jr

MANILA, Dec 21 (Reuters) - Chinese steel and iron ore futures ended higher on Wednesday after a five-day slide, but gains were tepid as heavy smog that has enveloped most of northern China curbed demand for the two commodities.

Construction activity has halted and many steel mills were ordered to reduce output to help rein in emissions, traders say, as northern Chinese cities including the capital Beijing saw thick smog for a fourth day.

Tianjin port, one of China’s busiest, has stopped handling coal, iron ore and other non-liquid products, traders familiar with the move said on Tuesday.

“I can’t see anything from my window,” said a Tianjin-based trader who has opted to stay home given the poor visibility in the city. “Our cargo agent will inform me when the port will reopen.”

The most-traded iron ore on the Dalian Commodity Exchange closed 0.8 percent higher at 573 yuan ($82) a tonne after falling as far as 553.50 yuan. Still, the contract has lost 13 percent since hitting a nearly three-year high last week.

Due to the heavy smog, authorities have asked mills in northern China including in the top steel-producing province Hebei to restrict production, said a trader in Shanghai.

“Some mills are not running on full capacity to reduce emissions,” he said, adding that steel supply was high.

Rebar on the Shanghai Futures Exchange edged up 0.4 percent to 3,169 yuan per tonne. The construction steel product has fallen 11 percent since touching a 32-month peak last week.

Physical iron ore trading had a similarly bearish tone, pushing the spot price back below $80 a tonne.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB slid 2 percent to $79.62 a tonne on Tuesday, according to Metal Bulletin. The spot benchmark touched a two-year high of $83.58 on Dec. 12. ($1 = 6.9498 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Gopakumar Warrier and Subhranshu Sahu)

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