Iron ore futures continued to spiral downward for third consecutive trading days as steel prices and margins began to decline.
The futures of Dalian Commodity Exchange (DCE) for September delivery then dropped by 5.70% on-day or up RMB 69 to RMB 1,142.50/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange, also fell by 4.74% or down RMB 258 day-on-day to RMB 5,186/mt.
Lower steel prices as market cools
The decline followed weakening sentiments on steel prices as the Tangshan billet prices decreased further by RMB 150 on-day to RMB 5,150 by Thursday late-afternoon.
Moreover, the Chinese domestic rebar prices were in an almost week-long decline since May 13 and recorded RMB 5,622/mt as of May 19, down RMB 153/mt on-day.
The declining steel prices indicated that the cooling measures imposed by Chinese regulatory bodies had worked well, though some trade participants expected some rebounds later in the week as the 10 hours per day sintering operation limit in Tangshan ended by May 20.
Commodity prices to come under pressures from Beijing policymakers
The Chinese authority remained firm in curbing ‘unreasonable’ price upticks to protect consumers, after the outcome of a cabinet meeting on Wednesday.
Steel and iron ore prices then came under the radar following the record-high price rally seen last week, which some trade participants deemed the uptick to be based on market speculations rather than on sound market fundamentals.
After the statement from Chinese policymakers, commodity prices including steel had a pullback overnight by mid-week, as market participants expected more Chinese government’s interventions on price controls and commodity supply.