Iron ore futures moved in a choppy fashion on Monday, over looming concerns for further production cuts in China.
The futures of Dalian Commodity Exchange (DCE) for September delivery then opened high, only to fall before recovery at the close with gain of 1.45% day-on-day or RMB 17 to RMB 1,188.50/mt during the day trading session on Monday.
The rebar futures also rallied by 1.42% on-day or up RMB 76 to RMB 5,432/mt, during the day trading session.
Steel prices to firm during the week
Chinese steel prices had showed some recovery over the weekends with Tangshan billet prices gaining RMB 110/mt to the RMB 5,130/mt level by Monday.
According to Mysteel, the rebar and wire rod prices were also expected to rise over the Jul 12-16 period, due to market anticipation of more output cuts.
Moreover, the Chinese steel market was also stimulated by the People’s Bank of China decision to reduce their cut the reserve requirement ratio for financial institutions by 0.5% point by Jul 15.
High daily steel output recorded in early July
After the centenary celebration, China’s daily crude steel production reached a daily average of 3.03 million mt over the first ten days of July, up 0.7% from previous ten-days period.
This was due to easing of the output restriction in Tangshan during July, as mills reduced their output voluntarily before the political party celebration on July 1.
Despite the rising production, more trade participants expected the Chinese authority to implement further output restriction measures in H2 2021, while a handful of participants anticipated the production cut to be steep to comply with stricter emission controls.