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Iron ore futures retreated on Thursday as intervention from authorities in top consumer China to curb the recent price rally weighed on sentiment, although prospects of improved demand capped losses.
The benchmark December iron ore on the Singapore Exchange fell 1.46% to $132.7 a ton after scaling a nine-month high a day before.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trade0.86% lower at 976.5 yuan ($135.42) a metric ton, after drawing closer to the psychological level of 1,000 yuan a ton on Wednesday.
China’s state planner said on Thursday that it would closely monitor changes in the iron ore market and further tighten supervision of spot and futures trading.
“It does not necessarily mean a start of a downward trajectory, but at least prices will stagnate following such moves,” said Pei Hao, a Shanghai-based analyst at brokerage FIS.
Prices losses were, however, limited by hopes of sustained demand amid improved steel margins and mills starting to stockraw materials to meet production requirements in winter, said analysts.
“The fall in daily hot metal output might be eased by improving profitability among steel mills,” analysts at Huatai Futures said in a note.
Other steelmaking ingredients gained some lost ground despite failing to reverse course, with coking coal little changed while coke eased 0.25%.
Some Chinese coking plants raised coke offering prices by between 100 yuan and 110 yuan a ton.
Steel benchmarks on the Shanghai Futures Exchange extended losses amid rising output and weakening demand.
Rebar shed 1.3%, hot-rolled coil dipped 0.22%, wire rod was largely unchanged and stainless steel fell 0.99%.
China’s top steel production hub Tangshan decided to remove a level 2 emergency response, which typically requires local mills to curb production from Wednesday as air quality improved.
Meanwhile, the latest cold wave expected to sweep across several regions sparked concerns over diminishing steel demand as construction activity is typically affected.