Dalian iron ore futures closed little changed on Wednesday, as investors grappled with reports of steel production curbs in northern China ahead of a military parade and signs of tightening global supply.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! traded flat to close at 795 yuan ($110.79) a metric ton.

The benchmark September iron ore (SZZFU5) on the Singapore Exchange was 0.6% lower at $103.8 a ton as of 0707 GMT.

Reports of steel mills in northern China being ordered to curb output to ensure clear skies during a military parade, to commemorate the end of World War Two, on September 3 continued to weigh on market sentiment.

The steel industry remains highly sensitive to government-mandated controls on production, with the short-term impact of such cuts usually being higher steel prices and margins, allowing the cost of inputs such as iron ore to rise, said analysts from ANZ.

Meanwhile, global iron ore shipments declined overall due to a fall in shipments from top producer Australia.

On the demand side, steel mills are replenishing inventories, as required, with daily average hot metal production, an indicator of iron ore demand, remaining high, said broker Hexun Futures.

Domestic construction steel continues to contribute less to iron ore demand, while manufacturing and overseas crude steel demand remains relatively high, said broker Galaxy Futures.

Elsewhere, Brazilian miner Samarco, a joint venture between mining giants Vale VALE3 and BHP BHP, has received court approval to exit bankruptcy protection proceedings, triggered by a 2015 dam collapse in Brazil that halted operations for several years.

Other steelmaking ingredients on the DCE fell, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 3% and 2.83%, respectively.

Steel benchmarks on the Shanghai Futures Exchange all declined. Rebar RBF1! eased 0.92%, wire rod (SWRcv1) dipped 0.6%, stainless steel COMEX:HRC1! fell 0.64%, and hot-rolled coil EHR1! lost 0.66%.
Source: Reuters