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Iron ore futures extend losses on China's anti-smog steel output curbs

Published 13/12/2019, 02:49 pm
© Reuters.  Iron ore futures extend losses on China's anti-smog steel output curbs

* Dalian iron ore reverses early gains

* Singapore iron ore also turns lower

* China to keep policies stable in 2020

By Enrico Dela Cruz

MANILA, Dec 13 (Reuters) - Chinese iron ore futures extended losses for a third straight session on Friday, turning lower after a brief recovery in early trade amid demand concerns for the raw material, as fresh steel production curbs loomed in China's biggest steelmaking region.

Dalian Commodity Exchange's most-traded iron ore contract DCIOcv1 , with May 2020 expiry, fell 1.3% to 643 yuan ($91.35) a tonne, reversing early gains of 1.1%.

On the Singapore Exchange, the front-month January 2020 contract was down 0.3% at $92.14 a tonne, as of 0256 GMT.

The "orange smog alert" issued by China's northern Hebei province, home to the country's top steelmaking cities, takes effect from Friday. alert requires companies including steel mills to take action to cut emissions, even restrict production in some cases, amid adverse weather conditions that could worsen pollution.

Iron ore losses were muted, however, as top steel producer China has vowed to keep economic policies stable while making them more effective in 2020 to help achieve its annual economic growth, Xinhua news agency said. Central Economic Work Conference, a closed-door gathering of top Chinese leaders and policymakers, was held in Beijing this week. The annual meeting is watched by investors for any fresh policy steps to ward off a sharper slowdown in the world's second-largest economy.

Such policy direction is "quite favourable to commodity demand", with steelmaking raw materials such as iron ore and coking coal among those likely to benefit the most, said Helen Lau, mining and metals analyst at Argonaut Securities.

China's "work plan" for 2020, and the possible de-escalation of trade tensions between Beijing and Washington as old tariffs may be reduced and new ones get delayed, would lend support to Chinese exports next year, Lau said.

"This should underpin recovery among Chinese private enterprises focused on exports," she said.

FUNDAMENTALS

* Benchmark spot 62% iron ore for delivery to China SH-CCN-IRNOR62 was steady at $94.80 a tonne on Thursday, the highest since Sept. 18 this year, data from consultancy SteelHome showed.

* The most-traded construction steel rebar on the Shanghai Futures Exchange SRBcv1 fell 0.9% to 3,502 yuan a tonne.

* Hot-rolled steel coil SHHCcv1 , used in cars and home appliances, slipped 0.8% to 3,727 yuan a tonne.

* Dalian coking coal DJMcv1 edged down 0.3% to 1,227 yuan a tonne and Dalian coke DCJcv1 lost 1.2% to 1,833 yuan.

* Shanghai stainless steel SHSSc1 slumped 1.4% to 14,115 yuan a tonne.

($1 = 7.0389 yuan)

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