Iron ore futures slid from the RMB 1,000 mark as restocking activities cooled, while more steel imports are expected to replace steel output.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) then fell by 4.78% day-on-day or RMB 49.50 to RMB 985.50/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange reversed into losses and dropped by 1.70% or RMB 74 day on-day to RMB 4,275/mt.
More steel imports to support Chinese demand in 2021
China Iron and Steel Association (CISA) expected more steel imports to meet Chinese steel demand, as Beijing policymakers tried to cut steel output to reduce carbon emission.
CISA believed that the Chinese government may provide more incentives for trade participants to import primary steel products like billets in 2021 to achieve environmental goals.
Meanwhile, the country’s steel consumption had grew by 7% on-year in 2020 amid the coronavirus pandemic, and CISA foresees modest growth for 2021 as well.
FMG’s record-high shipments to meet Chinese demand
Fortescue Metals (FMG) shipped record-high half-yearly shipment at 90.7 million mt of iron ores to meet strong Chinese steel demand.
The historical-high six-month shipment volumes got a boost from its December quarter shipment, which accounted 46.4 million mt of iron ore, according to FMG.
Despite the high shipping volume, FMG stated that there will be no changes to its full-year guidance of iron ore shipments set at 175 – 180 million mt for its 2020 financial year, though it is likely to finish at the higher end of its annual shipment target.
Moving forward, the miner did not see any slowdown in demand and maintained an optimistic demand outlook on China’s iron ore consumption.