Iron ore futures reversed into losses from previous day rally, despite a late recovery in the afternoon session.
The futures of Dalian Commodity Exchange (DCE) for the most-traded September iron ore contract then dipped slightly by 0.77% day-on-day or down RMB 6.50 to RMB 834/mt, during the day trading session on Thursday.
The rebar futures however rose slightly by 0.18% or up RMB 8 day-on-day to RMB 4,505/mt, during the day trading session.
Lower daily consumption of iron ore recorded in late May
The slump in the future trading session was traced partly to lower daily consumption of imported iron ore in China.
According to Mysteel, the daily consumption of imported iron ore sintering fines dropped for the third consecutive week to 544,000 mt per day, down 1.6% weekly.
The latest recorded daily volume was the lowest since early April for the survey done among 64 Chinese mills. The dip followed lower iron ore usage among the steelmakers in northern China due to thin steel margins and weak demand.
Medium grade fines remain popular among Chinese mills
More Chinese mills preferred medium grade fines as feedstocks over other grades, according to Platts report.
This was due to the improved supply of the grades as Rio Tinto’s production of new Gudai-Darri mine managed to hit the market. However, some market participants expected more sizable volume of PBF supply from the new mines to arrive in Q3 instead.
End-users also choose medium grade fines as there were difficulty in obtaining the low grade Indian fines due to higher export tax. Before using them to be blended with high grade fines like Carajas fines, amid the low steel margin environment.