source from：FT website
http://www.ft.com/intl/cms/s/0/37fd6a16-e59b-11e5-a09b-1f8b0d268c39.html?siteedition=intl#axzz42PQgYTTS
March 9, 2016 3:47 am
China flower show fuels iron ore surge
Lucy Hornby and Christian Shepherd

A flower show in the gritty Chinese industrial city of Tangshan has emerged as a major cause of the rise in iron ore prices this week, as steel mills rushed to buy before being forced to close to keep skies blue for 10m expected visitors.


Steel mills in the city, north-east of Beijing in Hebei province, have been told to shut down from late April to October to reduce pollution during an international horticultural exhibition. The city at the weekend urged its steel mills to increase production in anticipation of the shutdown, sparking a scramble for the key steelmaking ingredient.
Temporary air quality control measures implemented for the event will halve production at local mills until the end of September, said Jiao Yanlong, Tangshan’s Communist party secretary, citing the Tangshan Iron and Steel Association.
The horticultural exhibition’s grounds and lakes have been constructed on an area where extensive mining has caused the land to subside. The expo “shows that Tangshan has grasped the concept of green development”, Mr Jiao said.
Tangshan accounts for about a 10th of China’s steel production thanks to its rich coal and iron ore deposits. In a normal year it produces about as much steel as the US, the world’s fourth-largest steel-producing nation.

The city is at the heart of the crisis gripping the Chinese steel industry as capacity far outstrips demand. Many mills have already been mothballed and bands of unemployed workers often stage protests over unpaid wages.
The price of iron ore surged almost 20 per cent on Monday, the biggest leap on record, following months in the doldrums. Mills traditionally buy ore early in the year in order to ramp up steel production for the start of the construction season in the spring.
This year, anticipation of poor demand was suddenly offset by the rush to secure ingredients for half a year’s output in only a few weeks.


The price of iron ore, which had been expected to remain in decline given excess supply and slowing Chinese demand, has risen 46 per cent so far this year and is up 70 per cent from a record low hit in December.
The surge in prices pushed the Platts China steel sentiment index to its highest point since the index began in 2013.
Nevertheless, analysts say that because the long-term slowdown in China’s demand has not changed, the rally could prove fleeting.
Goldman Sachs, the most influential bank in commodity markets, remains bearish and predicts the recent rally will not last barring a sustained pick-up in demand from China, the world’s largest consumer.
The horticultural show rotates among cities internationally, and was last hosted in China by the northeastern port city of Qingdao in 2014.
This year’s expo coincides with the 40th anniversary of the Tangshan earthquake, the world’s deadliest of the 20th century.
Additional reporting by Luna Lin