BEIJING (Reuters) - China’s iron ore futures reversed gains on Monday tracking a broader selloff, but market still expects strong demand at steel mills after winter production curbs are lifted by the end of this month.
The most-traded iron ore futures on the Dalian Commodity Exchange dipped 0.2 percent to 611 yuan ($91.05) a tonne when market closed at 0700 GMT.
That followed a 2-percent drop at China’s Shanghai Composite as sentiment for equities soured on growing fears about a U.S. recession.
However, market generally believes the fundamental situation for iron ore remains firm.
“We expect steel mills to resume operations in April, which brings optimistic outlooks for iron ore market,” said analysts from Jinrui Futures in a note.
Steel makers in smog-prone northern regions were ordered to trim output by as much as 50 percent from November to March to reduce toxic emissions and improve air quality.
Some cities have already removed the restrictions, and more are expected to lift by the end of this week.
Utilization rates at steel mills across the country climbed 1.1 percentage points to 63.4 percent in the week to March 22, snapping two weeks of decline, according to data compiled by Mysteel consultancy.
Meanwhile, mining giants Rio Tinto, BHP and Fortescue Metals said their Australian operations had suffered some impact after two cyclones hit the country over the weekend, intensifying the concerns of tight iron ore supply from the country.
Prices of benchmark Shanghai rebar contract fell 1.8 percent to 3,692 yuan a tonne, as market worries about abundant supply amid climbing utilization rates.
Hot-rolled coil, a flat-steel product mainly used in manufacturing sectors, dipped 1.1 percent to 3,659 yuan a tonne.
Other steel-making raw materials also fell on Monday, as steel mills intended to reduce production costs.
Coking coal contract for May delivery lost 0.6 percent to 1,233 yuan a tonne, while coke futures slid 0.3 percent to 1,973.5 yuan.
Reporting by Muyu Xu and Dominique Patton; Editing by Shreejay Sinha