Iron ore futures down 5%, here’s why

The iron ore futures are lower by close to around 5 percent. According to a quick analysis, the bigger story is in terms of the Chinese steel production that is falling and that will be a good news and a positive read-through for the global steel environment on the whole.

Chinese steel producers are delivering on their promise of lowering their steel production on a monthly basis. For the month of August, that number has come at around 83 million tonne, that would be down by close to around 12 percent on a year-on-year (YoY) basis.

In the last few months, it is gradually becoming lower, even on a month-on-month (MoM) basis at 83 million tonne, it is close to around 4 percent approximately and that is a positive sign because Chinese regulators told the steelmakers that they cannot cross 2020 production levels in 2021.