Iron ore futures gained slightly in the day trading session, despite market sentiment on softer steel demand amid thin steel margins.
The futures of Dalian Commodity Exchange (DCE) for the most-traded September iron ore contract then hiked by 0.18% day-on-day or up RMB 1.50 to RMB 818/mt, during the day trading session on Thursday.
The rebar futures however fell slightly by 0.39% or down RMB 18 day-on-day to RMB 4,579/mt, during the day trading session.
Lower Chinese rebar production due to margin losses
Due to the thin steel margins, the Chinese rebar production had suffered a 13.6% drop year-on-year to 75.8 million mt over the Jan-Apr 2022 period, according to National Bureau of Statistics (NBS).
Many Chinese mills also did not ramp up rebar output in April, due to margin losses, as rebar maker suffered an average loss of selling rebar at RMB 154/mt, steeper than previous loss of RMB 94/mt recorded in March.
As the market sentiment remained bearish, due to Chinese steel demand were affected by lockdown measures in China, while export market was weak as well.
Declining Chinese steel prices and thin margins
The thin steel margins continued to affect market sentiment over low steel demand, as Chinese rebar prices followed downtrend pattern, while rebar prices remained unchanged.
According to Mysteel, the China’s national price of HRB400E 20mm dia rebar had declined for the fifth consecutive trading day to drop to an almost three-month low price at RMB 4,874/mt, down RMB 40/mt day-on-day.
This was due to the low daily spot sales of construction steel that fell by 11.7% day-on-day to 126,279 mt per day, based on Mysteel’s assessments.