Iron ore futures moved lower at the close due to market concerns over price controls following the recent rally.
The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE), for September delivery then dropped by 1.04% day-on-day or down RMB 12 to RMB 1,138.50/mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange, also inched down by 0.70% or down RMB 38 day-on-day to RMB 5,358/mt.
More interventions to curb record high prices
The market was spooked by price control measures, after the China Iron and Steel Association (CISA) remarked the record high iron ore prices as unreasonable.
This led some market participants to expect some policies or measures imposed by the Chinese authority to prevent further speculative trading that drive prices higher.
Meanwhile, China’s environment ministry is expected to send more inspection team to check on steel production which rose in Q1, despite strict output restriction being placed in Tangshan.
High margins for construction steels
The margins of flat and long steel products had reached around RMB 1,000/mt, amid the peak construction season during the April and May period.
Moreover, Platts estimated HRC and rebar margins at record-high levels of $177.88/mt and $138.75/mt respectively as of late April.
Due to the high steel margins, the Chinese mills continued to seek for higher grade materials to replenish inventory, while some mills were heard to seek for BRBF for its low alumina and high ferrous content.