Iron ore futures closed lower at the afternoon session, after a sell off session that begun at the start of the trading day.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then fell by 5.90% day-on-day or down RMB 63 to RMB 1,004.50/mt on Monday.
The steel rebar contract on the Shanghai Futures Exchange, dipped slightly by 0.13% or RMB 6 day-on-day to RMB 4,763/mt.
Lower raw material demand in view of extended output curb in Tangshan
The latest output emission cut of 30-50% had been prolonged from Mar 30 till Dec 31, which affected the demand for raw materials like iron ore in market.
Due to the stricter emission regulations, many mills were expected to increase the utilization of high-grade fines and direct feed materials like lump and pellet for improving efficiency in blast furnace.
Despite the prolonged output curb, Chinese crude steel ore production is expected to rise this year, due to new commission of pig iron and crude steel making facilities in 2021.
As the pig iron capacity is expected to rise by 17 million mt per year, while the steel capacity increased by additional of 30 million mt per year.
High steel prices amid output cut
Chinese steel prices continued to jump on limited production in Tangshan, as Mysteel expected rebar prices to strengthen during the Mar 22-26.
This was due to the traditional construction season during the months of March and April that increased the demand of rebar and wire rod usage for building sites.
Moreover, the Tangshan billet steel prices also reached an almost 12 year high at RMB 4,620/mt on Monday, after a jump of RMB 130/mt over the weekend.