By Emily Ou Yong
Iron ore futures fell on Wednesday as new European Union trade barriers on steel imports darkened the demand outlook, dragging steelmaking ingredients and steel benchmarks lower across the board.
The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) COMEX:TIO1! closed morning trade down 1.81% at 732 yuan ($107.76) a metric ton, the lowest so far this week.
The benchmark August iron ore (SZZFQ6) on the Singapore Exchange fell 1.6% to $97.4 a ton.
The European Commission unveiled quotas under a new system to limit duty-free steel imports into the EU, in a move designed to protect the bloc's steel sector and increase its capacity utilization.
Under the new rules, which take effect on Wednesday, the EU's annual tariff-free import quotas are slashed by 47% to 18.3 million metric tons, while an out-of-quota duty of 50% is introduced for 26 categories of steel products imported into the EU.
Weak steel demand in top consumer China also weighed on iron ore prices.
Chinese steelmaker Zenith Steel cut its early-July prices for rebar, typically used in construction, by 50 yuan per ton, data from consultancy Mysteel showed, reflecting falling steel demand that has been dragged down by the persistent property market downturn.
Other steelmaking ingredients on the DCE also weakened, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 2% and 2.33%, respectively.
Steel benchmarks on the Shanghai Futures Exchange declined across the board. Rebar SGX:RBF1! fell 0.52%, hot-rolled coil COMEX:EHR1! dropped 0.79%, wire rod (SWRcv1) traded flat and stainless steel COMEX:HRC1! shed 0.14%.
($1 = 6.7927 Chinese yuan)