MANILA: Benchmark Dalian iron ore and coke futures edged higher on Friday after recouping early losses, but they ended down on a weekly basis as fresh pollution alerts in China’s steelmaking provinces fanned worries about demand for the raw materials.

Dalian Commodity Exchange’s most-traded iron ore contract, with January 2020 expiry, finished up 0.6% at 625.50 yuan ($88.88) a tonne, after dropping 1.2% earlier in the session. It fell 0.8% from last week, based on its settlement price.

Factory activity in China expanded at its fastest pace in more than two years in October as export orders and production rose, a private business survey showed on Friday, buoying sentiment in some markets after disappointing Chinese factory data on Thursday.

Dalian coke, also for delivery in January, ended the session up 0.1% at 1,743 yuan a tonne, but it dropped 2.4% from last week.

“(Iron ore) is getting hit from both sides - softening demand and improving supplies from Australia and Brazil in the second half of 2019,” analysts at ANZ Research said in a note.

China’s top steelmaking province Hebei has issued an “orange” smog alert effective from Friday, with pollution expected to be “severe”, the local environment bureau said on Wednesday.

China’s top steelmaking city Tangshan, in Hebei, was scheduled to impose second-level pollution measures from as early as Thursday, according to local media.

That means some steel mills have to halt sintering and pellet production, while others need to curtail blast furnace operations by at least 50%.

Steel output restrictions to curb industrial emissions in China may continue and even intensify as the weather becomes colder towards the end of the year, a period when construction activities start to slow down, which may dent steel demand.

A new winter plan to curb emissions in northern China will not be enough to reverse last year’s sharp increase, official data shows, raising concerns that a weakening economy is eroding Beijing’s resolve to tackle pollution.

Benchmark spot 62% iron ore for delivery to China, which makes about half of the world’s steel, was at $85 a tonne on Thursday, based on data from SteelHome consultancy. That was the lowest since March 12 this year.

Rising inventory of imported iron ore at Chinese ports, which scaled a six-month peak of 134.1 million tonnes last week, based on the latest data from SteelHome, added to this week’s downward pressure on prices.

Brazilian iron ore miner Vale SA preemptively triggered an emergency protocol at its Forquilha IV dam, which processes waste from its Fábrica mine, but it said the move would not affect its 2019 production targets.

Rio Tinto, which could become the world’s top iron ore producer this year, on Thursday forecast a rise in iron ore shipments for 2020 of up to 5%, subject to market conditions.

The most-traded construction steel rebar on the Shanghai Futures Exchange ended up 0.2%, while hot-rolled steel coil, used in cars and home appliances, slipped 0.3%.—Reuters