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iron ore

Iron ore stackers and reclaimers in Port Hedland.

Chinese steel mills have been ordered to curb production once again to reduce air pollution, in the same week iron ore prices crept back towards $US100 ($139) per tonne.

The Chinese Government has sought to restrict crude steel production in 2021 to within 2020’s record levels of 1.064 billion tonnes, improving air quality and environmental credentials.

By the end of October this year, China had produced about 875.5 million tonnes of crude steel, according to the World Steel Association (WSA), leaving room for a further 190 million tonnes in November and December.

Considering the final two unrestricted months of 2020 produced 179 million tonnes, steel mills expected to resume normal proceedings to finish 2021, causing iron ore prices to rally from $90 per tonne to around the $100 mark.

On November 24, Mysteel reported 62 per cent Australian iron ore fines had increased by $4.5 per dry metric tonne to $103.45 – the first breach above $100 since the beginning of the month.

But a notice from the Tangshan city government – a major Chinese steel hub – has quickly brought steel mills back to Earth.

“A city government notice which began circulating from Wednesday morning said that the government was adopting the second-highest level of emergency measures – the “orange” alert level,” Mysteel stated.

Mysteel cited the government notice as stating the city will encounter “medium to heavy pollution, or even extreme heavy pollution, for a certain period of time.”

“The new measures took effect from Wednesday afternoon (November 24) and were announced just days after the mills and other industrial enterprises had emerged from the last round of curbs just last Sunday,” Mysteel stated.

China hasn’t increased its monthly steel production since a 2021-high of 99.5 million tonnes in May, according to the WSA

Worldwide steel production increased marginally in October to 145.7 million tonnes – the first global increase seen since May.