Iron ore futures inched up slightly for the second consecutive day of gains, amid mixed market outlooks over steel output cuts.
The futures of Dalian Commodity Exchange (DCE) for September delivery then went up by 0.52% day-on-day or up RMB 5.50 to RMB 1,067/mt, during the day trading session on Wednesday.
The rebar futures also hiked up by 2.46% day-on-day or RMB 131 to RMB 5,454/mt, during the day trading session.
Mixed outlook on steel demand
Some trade participants expected lower steel demand, due to more scrap imports and lesser steel exports.
As Chinese policymakers had removed scrap import tax since April and then followed by the removal of steel export rebates in July.
Furthermore, steel productions were affected by power saving measures for Chinese provinces experiencing hot weathers, which reduced steel outputs for mills based in Guangxi, Guangdong and Sichuan with an estimated production loss of 27,000 mt per day since late July.
Meanwhile, some trade participants saw some resilient in Chinese steel industry, expecting less stringent output cuts ahead, which will increase demand for steel-making raw materials like iron ores.
Expectation of more commodity price controls
Some market participants anticipated much flatter movement for steel and iron ore prices, in view of more state intervention over commodity prices.
With effect on Aug 1, the Chinese authority had standardized how price indexes are compiled and improve transparency on the release of information, with monitoring by the National Development and Reform Commission (NDRC).
Then, the Dalian Commodity Exchange (DCE) announced on Tuesday, Aug 3 that the exchange will investigate 48 cases of “abnormal trading behaviour” in July, in line with Chinese authority’s effort to stabilize commodity prices.