Iron ore futures continued to slump further on Tuesday, following similar downward trend at the start of week, due to thin market activities.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), thus dropped by 5.61% day-on-day or RMB 55.50 to RMB 933.50/mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange also dropped further by 2.21% or RMB 94 day on-day to RMB 4,154/mt.
End of restocking activities among Chinese mills
Most Chinese mills had completed their pre-Lunar New Year restocking activities, though some small parcels of purchases might emerge for replenishment purposes.
However, any purchases were likely to be from the docksides, as Chinese port inventories rose for the third consecutive weeks to 125 million mt as of Jan 30.
As market activities cooled down for the upcoming Spring Festival holidays, the Chinese mills’ blast furnace capacity utilization averaged 90.53% as of Jan 28, down 0.6% on-week, according to Mysteel.
Lower lump demand with the easing of sintering restriction in Tangshan
Lump demand is slated to soften as sintering and trucking restrictions were heard to ease in Tangshan, the steelmaking hub of China.
However, there might be some price support in the near term due to supply tightness of lump at ports, while seaborne cargoes remained scant as well.
Moving forward, market participants expected lump demand to soften further in March, as most of the sintering restriction is expected to ease by then after the winter period, while the supply tightness of coke may have eased by then as well.