Iron ore futures closed the week on slight gains, amid bearish market sentiments of low steel demand and high port inventory.
The futures of Dalian Commodity Exchange (DCE) for September delivery then rose slightly by 0.77% day-on-day or up RMB 9 to RMB 1,182.50/mt at the close of day trading session on Friday.
The rebar futures, however lost ground and inched down by 0.62% on-day or down RMB 32 to RMB 5,124/mt, during the day trading session.
Higher port inventory to ease supply tightness
There was some easing of the supply tightness situation as Mysteel recorded higher ports iron ore inventories at 122.35 million mt, up 589,500 mt week-on-week, as of Jul 2.
Meanwhile, China is expected to increase its total iron demand through local scrap production and pig iron to 45% by 2025, as compared to 37% in 2020, according to Shanghai-based research firm Horizon Insights.
At this rate, Chinese mills might reduce iron ore imports by 79 million mt per year over the next five years, while steel production was constrained by green initiatives to cut emissions.
Declining daily crude steel output in end-June
Chinese mills faced slower production rates as daily crude steel output rates dropped by 2.2% or 68,000 mt per day to 3 million mt per day, over the ten-day period of Jun 21-30.
The dip in daily steel output was due to suspension of sintering plants and blast furnace ahead of the centenary political party celebration in early July.
Hence, many trade participants expected steel production to resume later after the celebration and the short-term production restriction.