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 broadly lower.
The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) COMEX:TIO1! traded down 1.68% at 733 yuan ($107.85) a metric ton, the lowest so far this week.
The benchmark August iron ore (SZZFQ6) on the Singapore Exchange fell 1.9% to $97.05 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.
The new rules, which take effect on Wednesday, slash the EU's annual tariff-free import quotas by 47% to 18.3 million metric tons, while an out-of-quota duty of 50% has been introduced for 26 categories of imported steel products.
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 a persistent property market downturn.
Other steelmaking ingredients on the DCE also weakened, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 1.06% and 2.38%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar SGX:RBF1! fell 0.55%, hot-rolled coil COMEX:EHR1! dropped 0.79%, wire rod (SWRcv1) traded flat and stainless steel COMEX:HRC1! shed 0.03%.
($1 = 6.7963 Chinese yuan)