CHINA’S benchmark iron ore futures logged their first annual decline in three last year, with a roller coaster year that saw prices hit record highs before nearly halving amid the government’s strict output curbs to meet climate change goals.

The most actively traded iron ore futures contract on the Dalian Commodity Exchange for May delivery ended 0.9 percent higher at 680 yuan (US$106.71) per ton Friday, after dropping 12 percent in 2021.

After nearly quadrupling in 2019 and more than tripling in 2020, prices for the key ingredient climbed to a record 1,239 yuan a ton May 12, fueled by robust steelmaking demand.

That concerned authorities as China relies on imports for more than 80 percent of its iron ore, mainly from Australia and Brazil.

To boost its iron ore pricing power, China has amended trading rules at exchanges, encouraged inputs of more steel scrap, ramped up domestic production and explored overseas assets.

But prices only started to fall in the second half of the year when the government ordered that output at steel plants be slashed to reduce carbon emissions and other pollutants from the ferrous sector.

China’s iron ore imports fell 9.6 percent over June to November from the same period a year earlier. The product prices on the Dalian bourse dived 42 percent during those months.

Dalian coking coal and coke futures reported double-digit annual growth last year.

Apart from easing downstream demand, prices of the raw materials were also pressured by a widespread power crunch in September to October and government interventions to alleviate the issue.

Meanwhile, the continuing restriction of coal imports from Australia and the unstable pandemic situation in Mongolia have left the supply-side of metallurgical coal unstable.

Coking coal futures rose 1.6 percent to 2,229 yuan a ton at Friday’s close, sending their annual gain to more than 60 percent.

Coke prices stood at 2,934 yuan per ton at close and logged an about 23 percent jump in 2021.

China vowed to keep its 2021 crude steel output below the record 1.065 billion tons it made a year ago, which was seen as impossible by the sector amid a construction boom and manufacturing mania. That helped shore up steel prices throughout the first three quarters of 2021.

But a debt crisis at property firms in the last quarter spilled over into the ferrous sector, raising concerns about future demand. (SD-Agencies)