Chinese iron ore futures hit a contract low and steel futures touched a near six-week trough on Thursday, with some steel mills in top producer China cutting output as the government looks to curb pollution. Beijing has vowed to take more measures to clean China’s air, with tougher regulations forcing some steel mills to reduce production. Steel demand has also slowed as cold weather in northern regions hampers construction projects.
Falling production and a credit crunch have pushed mills to reduce purchases of raw material iron ore. Trading is also thinning as the end of the year approaches.
The most-traded iron ore futures contract, for May, on the Dalian Commodity Exchange hit a session low of 885 yuan ($150) a tonne on Thursday, a level seen on Monday and the lowest since the contract was launched in October. It was trading down more than 1 percent at 891 yuan by 0310 GMT.
Rebar futures on the Shanghai Futures Exchange extended losses on Thursday. The most active May contract dropped to 3,583 yuan a tonne on Thursday, a level last seen on November 18.