Iron ore futures ended on the week on dip after market participants became more cautious on sliding steel prices and margins.
The futures of Dalian Commodity Exchange (DCE) for September delivery then fell by 3.39% on-day or up RMB 38.50 to RMB 1,096.50/mt on Friday.
The steel rebar contract on the Shanghai Futures Exchange, were almost flattish throughout the day and dipped slightly by 0.74% or down RMB 38 day-on-day to RMB 5,112/mt.
Not-so-hot steel prices
Most Chinese buyers were heard on the sideline following the recent decline in steel prices and margins, which many trade participants expected further price corrections as Chinese authority stepped in to curb commodity prices.
For instance, the Tangshan billet prices had experienced massive price correction throughout the week, or a total price drop of RMB 470 over the span of four days before closing RMB 5,070/mt level on Friday.
However, some trade participants felt that the supply tightness of iron ore products like Carajas fines might provide some support in price uptick in near team.
Lower port inventory to support price upticks
Some trade participants also expected further price upticks in view of the low port inventory among Chinese ports.
According to Mysteel, the iron ore port inventory recorded at 125.11 million mt for the week ended May 21, down 223,000 mt on-week with significant lower imports from Australian iron ore that might resulted in tightness for medium grade fines.
Meanwhile, the blast furnace capacity utilization rate among Chinese steel mills went up for the seventh consecutive week at an average rate of 91.18% during May 14-20 period, up 0.31% on-week, indicating high steel production amid softening steel prices and margins.