Iron ore futures dipped slightly toward the close, after opening high in morning session on better market outlook on infrastructure sectors.
Thus, the most-traded iron ore for September delivery on China’s Dalian Commodity Exchange dipped slightly by 0.12% or RMB 1 day-on-day to RMB 820 per tonne on Tuesday.
Likewise, the steel rebar contract on the Shanghai Futures Exchange also saw a small drop by 0.75% or RMB 28 to RMB 3,724 per tonne.
China becomes net steel importer for the first time in 11 years
The market outlook for China’s infrastructure remained bullish, after the country’s infrastructure and property construction sectors got a boost from the implementation of monetary loosening and credit easing on the first half of 2020.
Both the infrastructure and property sectors accounted over 55% of China’s steel consumption and encouraged more steel imports to meet the demand.
According to the custom data, China imported a total of 2.48 million mt of semi-finished steel products in June. Most of these imports consisted of billet and slab and made the country, a net steel importer for the first time in 11 years.
Going forward, the import of semi-finished steel products is slated to rise further in July and August, while China’s steel exports are expected to be low, due to the robust steel demand from its stimulus economic recovery.
Easing of supply tightness
Meanwhile, China’s iron ore port inventory had been growing recently and eased market concerns over supply tightness.
As such, the country’s port inventory had reached around 113 million mt of iron ore since last week, indicating a gradual increase of supply since Jun-Jul period.
The uptick was contributed by China’s record-high import of iron ore at 66.1 million mt in June, up 12% month-on-month, and up 18% on-year basis.
As Australian miners like BHP and FMG exported as many iron ore as possible by end-June to close their account books for the fiscal year ended at 2019-2020.
In the meantime, Brazilian shipments also recovered by 46% on-month to 17 million mt exports in June, as mining operation recovered from rainy season earlier this year.