Iron ore futures rebounded from previous slump and gained higher upon market expectation of less stricter output curbs and lower iron ore shipments from suppliers.
The futures of Dalian Commodity Exchange (DCE) for September delivery then went up by 1.97% day-on-day or up RMB 20.50 to RMB 1,062.50/mt, during the day trading session on Tuesday.
The rebar futures however, fell by 4.55% day-on-day or RMB 250 to RMB 5,247/mt, during the day trading session.
Low shipping volumes from suppliers
Trade participants expected further supply tightness for imported cargoes, due to low shipment volumes from Australian and Brazilian suppliers.
According to Mysteel, the iron ore shipments of both countries reached 24.7 million mt during Jul 26- Aug 1 period, down 0.6% on-week with lower Australian shipment as compared to Brazilian ones.
The recent lower iron ore prices had also picked up some buying interests, while some trade participants expected less stricter output cuts ahead.
As the Chinese authority opted for a coordinated efforts in the future toward output curbs and avoided quick fixes to stabilize commodity prices.
Slower iron ore demand in August
Mysteel expected slow iron ore demand during August, as steel mills’ came under pressure to reduce their output from the Chinese authority.
Although, some trade participants believed the most stringent output cuts was over, but the rainy season and power saving measures were expected to affect steel demand and productions.
So far, rebar production had slowed by the end of July, reaching an output of 3.29 million mt during Jul 22-28 period, down 1.9% week-on-week, according to Mysteel’s survey over 137 Chinese mills.
Furthermore, the daily crude steel output of Chinese mills also dropped to a three-month low on an average of 3 million mt per day during the last 11 days of July, down 2.4% as compared to mid-July period.