Iron ore futures continued to slide on lower steel prices as steel demand started to lose steam amid peak construction season.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange fell by 2.03% day-on-day to RMB 772.50 per tonne on Tuesday.
However, the steel rebar contract on the Shanghai Futures Exchange stayed flattish and dipped slightly by 0.45% day-on-day to RMB 3,537 per tonne.
Lower steel prices amid peak season
The declining futures prices reflected bearish market sentiment for construction steel demand due to the recent softening of rebar prices.
For instance, the average price of HRB400 20mm dia rebar dropped further by RMB 15/mt day-on-day to RMB 3,780/mt, as of September 21.
In the meantime, the Tangshan billet prices also fell over RMB 100 since last week to RMB 3,320/mt level on Tuesday, due to lower-than-expected steel demand.
These price declines were followed by lower trading of construction steel comprising rebar, wire rod and bar-in-coil at 213,102 mt/day on Monday, down 10.1% day-on-day, according to Mysteel’s data.
Easing supply tightness of medium grade fines
The lower steel prices were due to the easing of supply tightness of medium grade fines in the market.
According to trade source, the supply of mainstream Australian fines had increased among port inventories, while there was much availability of medium grade fines at the seaborne market.
However, the Brazilian fines might face tighter supply in near term due to lower weekly shipments.
So far, Brazil had shipped a total of 6.4 million mt of iron ore over the Sep 14-20 period, down 1.73 million mt or 27% week-on-week, based on Mysteel’s data.