Iron ore futures inched for gains after a late market rally to recoup the losses made during the morning trading session.
The futures of Dalian Commodity Exchange (DCE) for the most-traded September iron ore contract then hiked slightly by 0.35% day-on-day or up RMB 3 to RMB 852/mt, during the day trading session on Wednesday.
The rebar futures however dipped slightly by 0.24% or down RMB 11 day-on-day to RMB 4,541/mt, during the day trading session.
Lower global steel production during Jan-Apr period
Perhaps, the earlier morning trading session slump followed the declining global steel production recorded by World Steel Association (WSA).
The association stated that worldwide steel production went down by 7.1% year-on-year to 619.1 million mt over the Jan-Apr 2022 period.
The low growth was attributed to slow economic global recovery from the pandemic, amid the higher energy prices spikes from the Russia-Ukraine conflict also incurred higher costs in steelmaking.
Weakening Chinese steel exports due to lower oversea demand
Chinese steel export demand had also declined recently, as enquiries from oversea buyers had dwindled amid competitive steel pricings in the global market.
Hence, the export price of China-origin SS400 4.75mm hot-rolled coil (HRC) had dropped by $39/mt week-on-week to $737/mt FOB from North China’s Tianjin port, according to Mysteel assessment.
Not only steel export prices took the dip, Chinese mills had also lowered steel scrap procurement prices for the third consecutive week, due to the softening steel demand.
For instance, the Shagang Group, one of China’s largest electric-arc-furnace (EAF) steelmaker had reduced scrap procurement prices by a total of RMB 200/mt in May 2022.