Chinese futures dropped on Tuesday, due to slow down in restocking activities.
The most-actively traded iron ore futures for September 2020 delivery on the Dalian Commodity Exchange (DCE) slid by 1.74% day-on-day to RMB 594.50 per tonne on Tuesday.
Similarly, the steel rebar contract on the Shanghai Futures Exchange also dropped by 1.14% to RMB 3,292 per tonne.
Bad weather to slow construction activities in China
Some trade participants expect a slowdown in construction activities in China due to the forecasted wet and hot weather in coming months of May and June.
In the meantime, the recent drop in steel prices had led Chinese mills on cost saving mode and were seeking Australian low-grade ores like SSF and other discounted Jimblebar fines and MAC fines to lower raw material costs.
There was some price easing over the Carajas fines as well as trade participants expected improvement of supply for high grade ores with more shipments in June.
BHP to expand Port Hedland
BHP plans to expand its iron ore export capacity from Port Hedland by additional 40 million tonnes per year to the total throughput of 330 million tonnes per year.
However, the development plan still needs to undergo 4-6 weeks of community consultation in order to go ahead with the construction which is likely to last till the end of the year.
Previously, BHP shipped around 238 million tonnes in the last financial year, around 85% of the terminal capacity. Despite the expansion, BHP iron ore shipment is expected at around 273 -286 million tonnes this year.