* Dalian, Singapore iron futures hit 7-week lows
* Spot 62% iron ore also at 7-wk low - SteelHome
* China Sept steel output skids to 6-mth low
* China’s GDP growth to grind to 27-1/2 year low
By Enrico Dela Cruz
MANILA, Oct 18 (Reuters) - Benchmark Dalian iron ore prices slumped to seven-week lows in early trade on Friday and were on track for their steepest weekly drop in more than two months, due to intensified steel production restrictions in China to curb air pollution.
A faltering global economy exacerbated concerns about demand for iron ore, while rising supply of the steelmaking raw material also added fuel to the sell-offs this week in steel and iron ore futures markets in China and Singapore.
China’s economic growth slowed more than expected to 6.0% year-on-year in the third quarter, the weakest pace in at least 27-1/2 years amid a bruising Sino-U.S. trade war.
Dalian Commodity Exchange’s most-traded iron ore contract , with January 2020 expiry, slumped 1.5% to 602.50 yuan ($85.22) a tonne, its lowest since Aug. 30.
China’s central province of Henan has issued an orange smog alert, the second highest in the nation’s three-tier pollution alarm system, which will be applied to 12 cities.
The alert means pollution controls in heavy industries, including steel and coke, will be strengthened from Oct. 18 to Oct. 23.
In China’s top steelmaking city of Tangshan, where tighter production curbs have already been imposed, anti-smog emergency measures will reportedly be strengthened in response to authorities’ warnings of deteriorating air quality.
Dalian iron ore has fallen around 7% from last week, extending losses into a fifth consecutive session.
“The downtrend may continue in the next few months,” a Shanghai-based trader said, citing in particular Tangshan’s “very strict” steel production restrictions, and the slowing global demand for steel and iron ore.
“Steelmakers in Europe and in Japan seem to be also under pressure and are cutting production,” the trader said. “Global demand for steel is not very good, while iron ore supply particularly in China is more than enough.”
* On the Singapore Exchange, the front-month November iron ore contract fell 1% to $82.01 a tonne.
* Benchmark spot 62% iron ore cargoes dropped further to a seven-week low of $86.50 a tonne on Thursday, from Wednesday’s $89.50, SteelHome consultancy data showed.
* From Oct. 18 to Oct. 22, “tougher operations restraints will be placed on (Tangshan’s) industries regarded as heavy emitters of pollution”, said industry website Mysteel Global, citing an Oct. 17 city government notice.
* China’s monthly crude steel output slid to a six-month low in September as mill operations were hit by a raft of restrictions aimed at cutting pollution.
* The most-traded construction steel rebar on the Shanghai Futures Exchange slipped 1.1% to 3,267 yuan a tonne.
* Hot-rolled steel coil, used in cars and home appliances, edged lower by 1% to 3,264 yuan a tonne.
* Dalian coking coal was down 0.5% at 1,222 yuan a tonne and Dalian coke slumped 2% to 1,746.50 yuan.
* Shanghai stainless steel also extended losses, down 1% to 15,125 yuan a tonne.
($1 = 7.0697 yuan)
Reporting by Enrico dela Cruz; Editing by Rashmi Aich