Iron ore futures closed at slight correction after a strong opening, only to sustain losses at the afternoon session due to rising port inventory.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange slipped by 0.31% or RMB 2.50 day-on-day to RMB 817 a tonne on Monday.
Similarly, the steel rebar contract on the Shanghai Futures Exchange edged down slightly as well by 0.27% or RMB 10 to RMB 3,701 per tonne.
Rising port stockpiles in China
Port inventory was in month-high which led market participants to expect further price correction on iron ores.
According to Steelhome consultancy, China’s iron ore port inventory rose to a month-high to 112 million mt for the week ended on July 17.
The inventory was similar to Mysteel’s tally of 110.47 million mt of iron ore port inventory across 45 major Chinese ports, up 1.69 million mt week-on-week.
Of which, the Australian iron ore imports accounted at 61.32 million mt, up 1.4 million mt on-week, while Brazilian iron ore imports slid by 153,300 mt on-week to 23.71 million mt.
Decent rebar margins and some supply tightness among port stocks
Despite the rising inventory, there was some supply tightness for Newman fines among Chinese port stocks especially for Chinese ports like Jingtang and Caofeidian.
Besides, the steel margins were still decent at the RMB 200/mt levels and some participants expect more steel demand ahead as the construction activities to resume after the end of the rainy season.
There was also a high demand for low grade fines, which were more cost effective in mixing with discounted iron ore concentrates.