Iron ore futures extended losses at the day session, despite lower steel stocks recorded by Chinese traders.
The futures of Dalian Commodity Exchange (DCE) for January delivery then fell by 6.95% day-on-day or down RMB 47 to RMB 629/mt, during the day trading session on Friday.
The rebar future also dropped by 2.25% day-on-day or down RMB 126 to RMB 5,478/mt, during the day trading session.
More stringent policies to curtail steel outputs
The declining steel stocks failed to lift market sentiments as market participants were concerned over further output cuts policies.
As China’s province of Jiangsu had stepped up its power saving policy to conserve electricity from its industrial sector, impacting around 20 out of 28 local steel mills.
According to Mysteel, the steel producers consisting of blast furnace and electric arc furnace makers, were asked to reduce or suspend operations along with cement and textile plants.
Lower steel stocks fail to support iron ore prices
Chinese traders’ steel stocks fell for the seventh consecutive weeks by 1.8% on-week to 22.2 million mt during Sep 10-16, based on Mysteel’s survey.
Market participants felt that the low steel stocks were not a reflection of high steel consumption, but rather due to lower steel production.
As the blast furnace capacity utilization rate hit a two-months low at 83.74% over the Sep 10-16 period s, down 1.03% on-week, due to the extended steel output cuts adopted by Chinese authority.