Iron ore futures closed on negative region, despite a late rally at the afternoon session before falling to a sharp drop again.
The futures of Dalian Commodity Exchange (DCE) for September delivery then slumped by 2.16% day-on-day or down RMB 18.50 to RMB 838/mt, during the day trading session on Thursday.
The rebar futures also fell by 1.72% day-on-day or RMB 94 to RMB 5,385/mt, during the day trading session.
More stringent steel output cuts from Tangshan
Tangshan is expected to implement more sharp steel output reductions as the city committee planned to cut its annual crude steel production in 2021 by around 14.2 million mt.
Some trade participants even expected more drastic production cuts toward the end of the year, as the city prepared for the upcoming Winter Olympics held in Beijing by February 2022.
Thus, Tangshan city authorities had postponed any commissioning of new iron and steel making facilities until mid-March 2022, in a bid to improve air quality.
So far, it was estimated that Tangshan-based steel mills will commission a combined crude steel making capacity of 9.4 million mt/year during the second half of 2021, after the closure of old facilities of 10.8 million mt/year capacity.
Low steel outputs to extend till end-August from power shortages
Due to the ongoing steel output cuts, the daily crude steel production of Chinese mills dropped by 1.2% to an average of 2.96 million mt per day over the Aug 1-10 period, according to Mysteel.
The lower daily steel output might last till end of the month, due to power saving policies of Guangxi, Guangdong and Sichuan provinces scheduled in mid or late August periods.
It was estimated that the power saving measures of these three Chinese provinces will reduce steel production by around 27,000 mt per day, implemented largely by state-owned mills.