Iron ore futures dipped slightly at the start of the new month, following market bearish sentiments on lower steel demand and poor economic indicators.
The futures of Dalian Commodity Exchange (DCE) for September delivery then dipped by 0.85% day-on-day or down RMB 9 to RMB 1,054/mt during the day trading session on Monday.
The rebar futures also went down by 5.55% day-on-day or RMB 318 to RMB 5,414/mt, during the day trading session.
Slow economic activities in China
Both China’s official and private Caixin manufacturing Purchasing Managers’ Indexes (PMIs) fell during the month of July, at 50.4 and 50.3 readings respectively.
The multi-months low PMIs readings signified slowing economy of China, though both readings were above the 50 points level, indicating that economy was still in expanding mode.
The slower manufacturing growth however, reflected the country faced various challenges in higher raw material and logistics costs, due to the global supply chain bottleneck, while there was a fresh Covid Delta variant outbreak in the city of Nanjing.
Mixed steel outlook for near term
Steel outlook was mixed too, as Mysteel expected some price upticks for steel products like rebar and wire rod at the aftermath of Typhoon In-Fa.
However, the market uncertainty over the resurgence of Covid Delta variant cases might offset the gains, as well as further implementation of stricter output cuts and emission controls by the Chinese authority for the latter half of the year.
Thus, Tangshan billet prices weakened at the start of the week, dropping RMB 50/mt day-on-day to RMB 5,170/mt on Monday, raising market doubts on steel demand.