MANILA: Dalian iron ore prices fell for a third straight session on Wednesday as concerns about tight supply eased, while steel futures extended a rally partly driven by production cuts imposed in some of China’s heavily polluted industrial areas.

Worries eased a bit about a global iron ore shortage that had sent spot prices to five-year highs and futures to record peaks in recent weeks, after Brazilian miner Vale SA resumed full operations at Brucutu mine.

Vale, the world’s No. 1 iron ore producer, said on June 19 that it would fully resume Brucutu operations within 72 hours, after an appeals court overturned an earlier ruling that halted processing amid concerns about the safety of a nearby dam.

“The mine was fully restarted on Saturday and should be back to 100% capacity relatively quickly,” ANZ Research said in a note.

The most-actively traded September iron ore contract on the Dalian Commodity Exchange ended down 0.3% at 804 yuan ($116.76) a tonne, not too far from its record peak of 837 yuan hit on June 20. It dropped as much as 3.4% earlier in the day.

Despite Brucutu coming back online, ANZ said it does not expect to see any material rise in Vale’s output this year, projecting a global iron ore shortage of 45 million tonnes this year and 33 million tonnes in 2020.

Brucutu had operated at only a third of its capacity after it was shuttered in February as Vale’s mine operations came under close scrutiny following the deadly Brumadinho dam collapse in late January.

Vale shut several dams and suspended some mining operations for safety checks, curbing iron ore supply to China, which makes half of the world’s steel.

Iron ore stockpiles at Chinese ports have declined steadily since mid-April to their lowest in two-and-a-half years, as of last week.

Additional downside pressure on iron ore prices was expected from output restrictions in some of the steelmaking hubs in China, which seeks to reduce persistently high industrial gas emissions, said SP Angel in London in a note.

China’s top steelmaking city of Tangshan has imposed a new set of output curbs on steel producers, some of which will have to halve production until the end of July.

The output curbs continued to underpin steel futures in China, which rose for a sixth straight session on Wednesday.

The most-actively traded construction steel rebar contract, for October delivery, on the Shanghai Futures Exchange, rose as much as 1.2% to 4,013 yuan a tonne in early trade, its highest since August 2011. It ended up 0.9% at 3,998 yuan.

Hot-rolled coil, steel used in cars and home appliances, closed 0.3% higher at 3,916 yuan a tonne, after hitting a record 3,944 yuan earlier in the day. Other steelmaking raw materials also traded higher, with Dalian coking coal up 0.2% at 1,378.5 yuan a tonne. Coke futures rose 1.5% to 2,105.5 yuan.

China’s imports of Australian coking coal in May plunged 49.3% from a month earlier, customs data showed on Tuesday, as buyers held off purchases because of uncertainty regarding government policy on Australian imports.—Reuters