Iron ore futures continued to extend losses at the day session, over market concerns over new wave of pandemic spread in southern China that affected steel demand.
The futures of Dalian Commodity Exchange (DCE) for January delivery then fell by 3.94% day-on-day or down RMB 27.50 to RMB 670.50/mt, during the day trading session on Thursday.
The rebar future however, inched up slightly by 0.84% day-on-day or up RMB 46 to RMB 5,541/mt, during the day trading session.
Poor steel demand outlook in southern China
Southern Chinese steel market were affected by lockdown measures on Fujian province, after a fresh outbreak of pandemic in the city of Putian.
Steel deliveries were delayed by traffic checks, while some construction activities were suspended that reduced steel consumption.
Iron ore demand were expected to take a hit too, as the restocking activities before the Golden week holidays were slowed to pick up this year, and the new wave of pandemic further dampened market sentiments.
Lower daily steel output in early September
China Iron & Steel Association (CISA) recorded a drop of daily crude steel output in early September and expected further declining output to continue.
During Sep 1-10, the association recorded daily crude steel output at an average of 2.04 million mt, down 0.6% from late August, due to the ongoing steel production curbs.
The lower daily output had lowered iron ore procurement, as trade participants expected further price corrections especially for medium grade ores such as PBF, Mac fines and Jimblebar fines.