Iron ore futures were a touch softer on Tuesday as investors assessed outlook for iron ore.
China imported 1.25 million mt of finished steel in May, up 27.2% month-on-month or up 30.3% year-on-year, according to customs data. During the same period, China’s finished steel exports fell by 30.4% month-on-month or 23.4% to 4.4 million mt in May.
The high-import-and-low-export volumes indicated strong domestic steel demand as rising construction activities prompted Chinese steel mills sell domestically rather than to overseas markets that continued to grapple with the coronavirus pandemic.
However domestic steel demand could become weaker in the coming months as southern China heads into its rainy season. Meanwhile, supply concerns remain after Vale’s mine complex of Itabira which accounted for more than 10% of output in the state of Minas Gerais was forced to shut down due to Coronavirus. According to the latest data from Brazil’s Ministry of Industry, Foreign Trade and Services, Brazil’s iron ore exports fell by 10% on month to about 21.6 million tonnes.
This is consistent with port inventories data by Mysteel which showed that Brazilian iron ore inventories at China’s 45 Chinese ports declined 4.67 million tonnes form April 30 to around 21.8 million. Hongyuan Futures Ltd believed that it is nearly impossible for Vale to maintain its full-year guidance of 310-330 million tonnes.
Futures in Singapore were softer but since steadied during the London morning. Jul was seen trading from 100.85 to as high as 101.25 before easing off to around 101.0 as of 11.20 am London time.