Iron ore futures closed the afternoon session with slight gains against previous losses in the morning session, due to market concerns over slack steel consumption season.
The futures of Dalian Commodity Exchange (DCE) for September delivery then inched up slightly by 0.91% on-day or RMB 11 to RMB 1,225/mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange, however dropped by 1.47% or down RMB 77 day-on-day to RMB 5,168/mt.
Further corrections for rebar prices
The steel rebar and wire rod prices are expected to slide down further for the week ended on Jun 18, according to Mysteel.
As trade participants believed that the hot summer in northern China and rainy weather in southern Chinese province will affect construction activities in the typical lull steel season.
Furthermore, the rebar inventory among commercial warehouses were mostly flat on weekly basis, down 0.07% on-week to 10.6 million mt as of Jun 10, based on Mysteel’s data, indicating decline in rebar demand.
Rising Covid cases in southern China causes shipment delays
Besides the rainy season in southern China, trade participants were also concerned about rising Covid cases in Guangdong province, a major shipping hub in China.
It was estimated that the shipping hub accounts nearly a quarter or 24% of China’s total exports, hosting the world’s third and fifth largest ports namely Shenzhen and Guangzhou ports.
According to trade sources, the vessel delays resulted an average waiting time of 0.5 days to 16 days for port like Yantian located in Shenzhen, due to stricter custom check measures.
Trade participants also feared that the shipping delays and rising Covid cases in southern China might cause higher commodity and shipping costs, eventually contribute higher inflationary pressure to other countries.