China's Dalian iron ore futures edged up on June 5, lifted by market concern about tight supplies after a report that Tangshan city plans to shut hundreds of mining companies, although prices remain under pressure from mounting stockpiles at ports.
Tangshan, the country's No.1 steelmaking city in Hebei province, said it will close 226 mining firms - half iron ore miners - that do not have legitimate licenses as part of efforts to curb illegal mining and cut pollution.
The central government, meanwhile, has sent teams of inspectors to 10 regions to check rectification measures after previous probes uncovered thousands of environmental violations. Some regions have promised to beef up anti-pollution curbs.
"The inspections may affect some iron ore output, which will help ease oversupply pressure in the market," said analysts at Founder CIFCO Futures in a note, although they warned the impact may be offset by rising imports of the raw material.
The most-traded iron ore, for September delivery, on the Dalian Commodity Exchange rose 0.3% to 460.5 yuan/t ($71.83/t) by 0223 GMT.
Stockpiles of imported iron ore at Chinese ports continued to build last week as of June 1, adding 1.4 million tonnes to 161.98 million tonnes, the most since at least 2011.
The most-traded construction steel rebar futures on the Shanghai Futures Exchange fell for a second session, slipping 1% to 3,695 yuan/t on tepid demand.
Last week, the utilisation rate at blast furnace across the country fell for the first time in three months, easing 0.14 percentage points to 71.82%.
Local authorities in eastern province Shandong are encouraging industrial plants to reduce emissions ahead of the Shanghai Cooperation Organization summit in Qingdao city this week. Some mills in Shandong have scheduled maintenance, but the market expects the impact on output to be limited.
"Currently lukewarm trade in the market is mainly due to oversupply ... the coming rainy season will further curb steel demand in downstream sectors," said a Shanghai-based trader.
Rebar stocks at Chinese traders fell to 5.32 million tonnes last week, down 5.9% from a week earlier.
Spot steel prices fell 0.1% to 4,338.63 yuan/t on June 4.
Sources:sxcoal
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