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Iron ore price retreats as steel production cuts spark demand concerns

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Chinese iron ore prices tumbled as much as 3.6% as steel production cuts at some mills sparked concerns about demand for the steelmaking ingredients.

A major steel producer in eastern China had been urged to idle its blast furnaces after a central government inspection, according to Zhuo Guiqiu, an analyst with Jinrui Capital, who declined to name the producer.

Benchmark iron ore futures on the Dalian bourse dropped 2.9% to 1,188 yuan per tonne.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $218.04 a tonne on Thursday, down 1.8% from Wednesday’s closing.

China had pledged to control its annual crude steel output at lower level than last year. The country’s state planner said earlier this year that it would conduct field inspections in June-July.

There are increasing worries that demand for raw materials such as coke would further weaken as more places are said to have stepped up steel output controls, Zhuo added.

Coking coal futures declined 5.3% at close to 1,831 yuan a tonne, the lowest since June 9.

China’s cabinet said on Wednesday that it would timely adopt monetary policies such as cutting the bank reserve requirement ratio to support the real economy against rising commodity prices.

($1 = 6.4803 Chinese yuan renminbi)

(With files from Reuters)

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