Iron ore futures inched down slightly on Thursday, after a sharp fall yesterday, as market braced for more steel output cuts during the peak steel demand season.
The futures of Dalian Commodity Exchange (DCE) then inched down by 0.58% day-on-day or RMB 4.50 to RMB 773.50/mt during the day trading session on Thursday.
The rebar futures, however, went up slightly by 0.21% day-on-day or RMB 11 to RMB 5,273/mt, during the day trading session.
More output cuts as norm toward year-end
Beijing policymakers’ call for further output cuts and emission curb had intensified, with more stringent production restriction in Shandong province.
Market participants expected more production curbs to come online, despite the market entering toward the traditional peak construction seasons.
Meanwhile, some trade participants believed that the further output will be minimized, or roughly around the daily crude steel output level of late-August to meet steel demand during the peak season.
As Mysteel recorded the daily crude steel output at an average of 2.87 million mt per day during Aug 21-31 period, down 1.9% from previous ten-day period.
Poor steel sales despite peak season
Market sentiment also turned bearish, due to the poor steel sales observed in China, amid traditional season for steel consumption during Sep-Oct period.
According to Mysteel, the Chinese spot trading of construction steel products reached 163,343 mt per day as of Sep 1, a low level as compared to the average of 200,000 mt per day sales since May 2021.
Apparently, trade participants were more cautious in purchasing of steel products like rebar, wire rod and bar-in-coil during peak season this year. Due to the rainy weather in central China and growing infections of the Covid Delta spread that affected demand.