Iron ore futures dipped in the day session, despite opened higher in the morning amid market concern over weak steel margins.
The futures of Dalian Commodity Exchange (DCE) fell by 1.36% day-on-day or down RMB 11 to RMB 796/mt, during the day trading session on Thursday.
The rebar futures also dropped by 0.99% or down RMB 46 day-on-day to RMB 4,612/mt, during the day trading session.
More buyers prefer to purchase from ports
Due to the import loss, more Chinese buyers preferred to snap up cargoes from portside, as restocking activities had picked up recently.
More Chinese mills were also heard to be seeking medium grade fines like PBF for their cost efficiency, as compared to low grade fines products.
According to Platts report, some trade participants expected BHP’s monthly discount to narrow further in June, in view of the thin steel margin.
Hence, the iron ore lump demand had also softened due to upcoming wet season in southern China and low steel margins.
Lower veicles productions from Covid lockdown
Market was also concerned over less steel demand from the car industry, as Japanese automaker, Toyota planned to suspend more production lines.
The suspension was due to the prolonged lockdown in Shanghai and lack of semiconductors which led Toyota to close 20 production lines at 12 plants in May, with a projected output loss of 150,000 vehicles.
In the meantime, the Japanese carmaker also saw a production dip in Q1, totaling 2.65 million units over Jan-Mar 2022, down 0.5% yearly and the company expected further production losses for both April and May.