Iron ore futures closed higher due to better steel prices and the persisted low monthly iron ore imports arrival to China.
The futures of Dalian Commodity Exchange (DCE) for September delivery then soared by 3.29% day-on-day or RMB 39 to RMB 1,225/mt during the day trading session on Tuesday.
The rebar futures however, dipped slightly by 0.13% on-day or up RMB 7 to RMB 5,458/mt, during the day trading session.
Low iron ore arrivals to China
China imported 89.42 million mt of iron ore in June, down slightly by 0.4% month-on-month but marked a 13-month low of iron ore arrival to Chinese ports, according to customs data.
It was also a third consecutive decline of iron ore arrival to China, indicating the supply tightness situation was not out of the woods yet.
Similar low import trend followed in early July as well, as Platts cFlow data showed that weekly iron ore exports from mining majors had fell by 20.3% on-week to 19.66 million mt during the Jul 4-10 period.
Steel prices face more headwinds ahead
Tangshan billet prices had stayed above the RMB 5,000/mt level, but Mysteel expected more price corrections during the H2 2021, following closer to market fundamentals.
Hence, the consultancy firm predicted slower steel demand growth and lower raw materials cost in view of higher supplies for the second half of the year.
Thus, a price moderation may occur in Q3, followed by further softening of steel prices in Q4 in reflections of market fundamentals and less on speculations.