Iron ore price lowest in 3 months on China’s rumored plan to cap steel output

China’s unconfirmed plan to limit annual crude steel output, as it seeks to curb iron ore price speculation, has been a drag on the market.

China is set to release the plan by the end of this month, capping domestic steelmakers’ output at 2022 levels, Bloomberg reported.

Struggling to reduce carbon emissions and meet climate commitments, the Chinese government has long had the heavily polluting steel sector in its sights. The industry accounts for about 15% of national emissions, second only to electricity generation.

Benchmark 62% Fe fines imported into Northern China fell 1.47% on Thursday, to $118.29 per tonne, the lowest since January.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended daytime trade 3.1% lower at 769 yuan ($111.89) a tonne.

“Iron ore is facing price control pressure, and policy risks continue to increase,” Sinosteel Futures analysts said in a note.

Meanwhile, Port Hedland in Australia’s northwest region, braced on Thursday for Cyclone Ilsa, the area’s most powerful tropical cyclone in a decade, potentially disrupting supply and providing support to iron ore prices.

Port Hedland is the world’s biggest export point for iron ore.