Chinese futures rose on better Chinese iron ore demand, while tight port inventory and slow shipment continued to support price upticks.
As such, the most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), for September delivery, jumped by 5.41% on-day to RMB 691.50 per tonne on Monday.
Following the rally, the steel rebar contract on the Shanghai Futures Exchange hiked up by 2.17% day-on-day to RMB 3,528 per tonne.
Not much impact from Tangshan sintering cut
The Chinese authority had imposed sintering cut in the steelmaking hub of Tangshan, where selected mills were only to have one sintering units running, while the remaining were shut down.
Some trade sources viewed the sintering cuts as part of Chinese authority to improve air quality during big events and for this case, for the upcoming National’s People Congress meeting on 21 May 2020.
Thus, many mills have already prepared for such cuts and thus have limited impact in the market from the sintering cut that started from 18 May till the end of May.
Further drop in Japan’s carmaker steel demand
Japan’s steel demand is expected to hit a lull, as carmaker, Toyota had extended domestic vehicle output cuts into August in view of lower consumers demand caused by COVID-19.
The carmaker will close all 15 domestic assembly plants every Friday in June and suspended output for up to 7 days on 10 of its production lines.
In total, Toyota is estimated to cut its vehicle output by 122,000 units in June, in view of the low demand of new cars for the coronavirus-hit 2020.
Overall, Japan’s crude steel output is estimated to drop by 26% on-year to 19.4 million tones during Apr-June or Q2 2020 , the lowest quarterly output in 11 years.
As largest steel mills like Nippon Steel and JFE Steel decided to suspend some of their blast furnaces, citing lower downstream demand for this case, depressed automobiles demand.