Iron ore futures fell further over subdued steel demand and low restocking activities among mills.
The futures of Dalian Commodity Exchange (DCE) for September delivery then fell by 3.73% day-on-day or down RMB 31.50 to RMB 813/mt, during the day trading session on Wednesday.
The rebar futures, also dropped by 3.71% day-on-day or RMB 198 to RMB 5,144/mt, during the day trading session.
Higher traders’ stocks due to low steel consumption
The slow steel demand had resulted higher iron ore stocks held by traders, as Mysteel recorded 70.4 million mt of iron ore traders’ stocks as of Aug 12.
The iron ore stock volumes were at a six-year high, just shy of the peak 70.7 million mt reached on July 22. As Chinese mills were no hurry to produce steel, while restocking of steelmaking materials were expected to keep at minimal or on need basis.
Moreover, there was also market uncertainty over Chinese authority in pursuing further steel production cuts or introduction of stringent environmental regulation to cut emissions.
Further price corrections amid limited steel outputs
Some buyers had refrained from purchases, citing high iron ore prices, though prices had fallen recently, but still considered high by many end-users.
According to trade sources, there were high levels of iron ore stocks stored in the value chain like on vessels, port stocks and mills inventory, as compared to two years ago.
Thus, market expected further downward momentum of iron ore prices, while mills preferred discounted iron ore fines like Jimblebar fines, MAC Fines and Super Special Fines for cost savings.