Iron ore futures rebounded on Tuesday, after recent losses as the exchange issued a statement last week urging market participants to trade rationally.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange gained by 2.33% or RMB 19 day-on-day to RMB 834 per tonne on Tuesday.
However, the Shanghai Futures Exchange dropped slightly by 0.68% or RMB 26 day-on-day to RMB 3,795 per tonne.
Supply tightness from mainstream iron ore products
The uptick of iron ore futures reflected the supply tightness of mainstream iron ore brands among Chinese ports.
As the overall port inventory went down by 569,600 tonnes week-on-week to 113.45 million tonnes among 45 major ports for the week ended Aug 7, based on Mysteel’s data.
The lower inventory was due to lesser shipments as Shanghai Metal Market (SMM) estimated a weekly drop of 2.31 million tonnes to 12.65 million tonnes during the Aug 2-8, from a total of 77 vessels.
Furthermore, there was some congestion in ports that made new cargoes arrival more difficult to replenish the shortfall of certain grades like PB Fines, Newman Fines, Mac Fines and Jimblebar Fines, which the Chinese buyers were seeking at the moment.
China turns to smaller suppliers to meet steel demand
To fuel its robust steel demand, China has turned to other smaller suppliers with imports of iron ores from Canada at 1.66 million tonnes, then another 1.86 million from Ukraine and 1.56 million tonnes from India during the month of July.
These China-bound shipments later attributed to record-high iron ore imports in July at 112.65 million mt, up 24% year-on-year.
There are signs that China might continue to import from smaller suppliers in August, as there was a slight decline of Australian exports at 16.4 million tonnes for the week ended on Aug 9, down 1.5% on weekly basis.