Iron ore futures declined for the second consecutive trading day, due to weakening steel prices and margin amid seasonal lull steel demand.
The futures of Dalian Commodity Exchange (DCE) for September delivery then fell by 2.69% day-on-day or down RMB 31.50 to RMB 1,139/mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange also went down by 2.12% or RMB 106 day-on-day to RMB 4,885/mt.
Stricter monitoring from market regulator
Market sentiment was low as trade participants expected tougher stance to be taken up by Chinese regulatory committee on market speculation and hoarding of commodity.
This was followed by the announcement of National Development and Reform Commission (NDRC) on Monday, that a probe will be launched to investigate on market irregularities and malicious practice on commodity market.
Going forward, market participants expected more state intervention on futures trading amid slowdown of construction activities during the rainy season.
Rising semi-steel imports for June and July
China’s import of semi-finished steel imports saw a sharp jump by 41% on-month to 1.23 million mt in May, with strong indication of higher import volume in June and July.
Some trade participants believed that the trend to last till the end of the year, as to comply with state policy of cutting steel output to reduce emission.
Meanwhile, the daily crude steel output had dipped in mid-June to an average of 3.08 million mt per day, down slightly by 0.2% from early June, due to mills’ maintenance period and slow steel demand in southern China.