Iron ore futures inched up slightly, due to market concerns over slower steel demand with rising steel stockpiles and easing of supply tightness in iron ore stocks.
The futures of Dalian Commodity Exchange (DCE) for September delivery then inched up slightly by 0.87% day-on-day or up RMB 10 to RMB 1,164.50/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange also spotted small gains of 0.65% or RMB 32 day-on-day to RMB 4,933/mt.
Easing of supply tightness during H2 2021
According to Mysteel, there will be easing of iron ore supply during the July-December 2021 period, due to growing supply in domestic and higher seaborne imports that outstrip demand.
Mysteel estimated that there might be an oversupply of around 2.56 million mt of iron ore by the end of year, given the higher import volumes and mines’ ramping up of output during the second half of the year.
However, the consultancy firm predicted lower iron ores import in June, estimated to fall short of demand by around 7.13 million mt, due to slow Australian and Brazilian shipment arrivals to China.
Growing steel stockpiles due to slower consumption
Steel demand seemed to slow during the hot summer and rainy season as Mysteel recorded a total of 22.3 million mt of finished steel stocks held by Chinese traders, up 1.7% on-week.
According to Mysteel’s data, the rising steel stockpiles had grown for the second consecutive week as of June 24, indicating slower steel consumption and demand.
Among the steel stocks, the finished products consisted of rebar, wire rod, hot-rolled coil (HRC), cold-rolled coil and medium plate held by traders across 132 Chinese cities.