Iron ore futures dipped at the session close, due to weak market outlook and extension of production cuts to other Chinese regions.
The futures of Dalian Commodity Exchange (DCE) for September delivery then fell by 1.59% day-on-day or down RMB 13.50 to RMB 834/mt, during the day trading session on Tuesday.
The rebar futures, also dropped by 0.83% day-on-day or RMB 45 to RMB 5,345/mt, during the day trading session.
Lower iron ore shipments fail to lift market sentiments
Market sentiments turned bearish on lacklustre steel demand, despite some supply tightness concerns from lower iron ore shipments.
According to Mysteel, the iron ore shipments from Australia and Brazil dropped to a 3-month low during the Aug 9-15 period at 22.8 million mt, down 11.3% or 2.9 million mt week-on-week.
However, the low iron ore shipments failed to spur the market interests as trade participants were still concerned about the ongoing steel output cuts, which were expected to extend to other regions of China over the near term.
Minimal restocking and market talks of new taxes on steel exports
China’s steel demand is expected to take a hit from the resurgence of COVID-19 cases and Chinese authority’s pledge to lower emissions by curbing steel output.
Thus, some trade sources expected Chinese mills’ to restock at minimal level in August, ahead of the typical peak steel demand period of September-October.
There were also some market talks that Beijing policymakers might impose new taxes on steel exports at the range of 10-20% in August, which further dampened market sentiments, though no official statement had been made yet.