Iron ore futures faced a selloff in the day session, due to market concerns over firmer commodities’ price controls and bad weathers that affected transportation and logistics in Henan, China.
The futures of Dalian Commodity Exchange (DCE) for September delivery then slumped down by 3.85% day-on-day or RMB 47 to RMB 1,174/mt during the day trading session on Wednesday.
The rebar futures, however inched up slightly by 0.27% on-day or RMB 15 to RMB 5,561/mt, during the day trading session.
Flood to disrupt logistics in Henan, China
The torrential rains had dampened market sentiments, which resulted in flood and disrupted transportation and logistics in central China’s province of Henan.
According to Mysteel, the flood had caused a fire incident in an aluminum alloy plant, while steel production plants had been operating as per normal since the heavy downpours at start of the week.
Despite the minimal impact to steel output, trade participants were concerned over the flood’s impact on the logistics of raw materials, as well as potential power outages in the central Chinese province of Henan, which is just south of heavy steel-making province of Hebei.
Chinese authority to introduce more commodity prices curbs
Market participants were also concerned about the latest announcement from National Development and Reform Commission asking local authorities to monitor and regulate price stability for commodity prices.
Many trade participants felt that there will be more firmer controls for commodity prices like steels to prevent market speculation and hoarding practices.
Moreover, the Chinese authority were expected to introduce more production cuts during the second half of the year, thus Tangshan billet prices moved flatly at around RMB 5,180/mt, unchanged since Jul 18.