Iron ore futures slumped during the morning session, due to production cuts and more commodity prices curbs from the Chinese authority.
The futures of Dalian Commodity Exchange (DCE) for September delivery then plunged down by 5.32% day-on-day or RMB 64 to RMB 1,138/mt during the day trading session on Thursday.
The rebar futures, however, went up by 1.09% on-day or RMB 61 to RMB 5,648/mt, during the day trading session.
More output cuts and tougher price controls
Market participants expected more steel production cuts after the Chinese authority asked various steelmakers in Jiangsu, Fujian and Yunnan to reduce output.
This was part of Chinese authority pledge to reduce emission and thus decided not to exceed previous year crude steel production level at 1.053 billion mt.
Moreover, local governments were also asked to monitor steel prices regularly to prevent prices spike based on market manipulation and speculation.
Slight gains among China’s retail steel stocks
Steel demand seemed to slow down in China, as retail steel stocks moved flatly with slight gain recorded for July 16-22 period.
According to Mysteel, the total inventories held by trading houses reached 23.3 million mt as of Jul 22, up 0.1% or 28,900 mt week-on-week.
This was in line with slower growth of China’s white goods or electrical appliances which grew at 5.6-33.5% during H1 2021 as compared to 10.2-37.3% during the Jan-May 2021 period, based on Mysteel data.