Iron ore futures slumped during the morning session, amid slower steel consumption and higher port inventory.
The futures of Dalian Commodity Exchange (DCE) for September delivery then fell by 2.01% day-on-day or RMB 23 to RMB 1,124/mt during the day trading session on Friday.
The rebar futures, however, went up by 2.20% day-on-day or RMB 122 to RMB 5,671/mt, during the day trading session.
Rising semi-finished steel imports and high port inventory
Market participants expected steel demand to drop at a slower pace after some mills suspended their blast furnace in compliance to China’s policy of reducing output.
Thus, the iron ore port inventory recorded a weekly buildup of 2.96 million tonnes to 128.48 million mt for the week ended Jul 23, based on Mysteel’s data.
Moreover, China also increased the import of semi-finished steel during June, as part of state policy to lower the country’s overall crude steel production.
According to the Chinese customs, the country imported 1.3 million mt of semi-finished steel imports in June, up 5.7% month-on-month.
CISA expects more price swing for domestic steel
China Iron & Steel Association (CISA) predicted more price fluctuations for Chinese domestic steel prices in the near term, due to traditional lull season and changes in market fundamentals.
The rainy season often hampered construction activities during summer, and the flood in Henan disrupted transportation networks of central China.
Moreover, the steel mills were under pressure from the Chinese authority to cut production to comply with stricter emission controls.
However, the Tangshan billet prices remained firm by the end of week, and increased by RMB 20 day-on-day to RMB 5,200/mt on Friday, while rebar prices stabilized around RMB 5,342/mt.