Iron ore futures suffered a sharp fall in the morning session, before recovering some positions during the afternoon session.
The futures of Dalian Commodity Exchange (DCE) for September delivery then dived down by 2.66% day-on-day or RMB 31.50 to RMB 1,196/mt at the close of day trading session on Tuesday.
The rebar futures also dipped slightly by 0.49% on-day or down RMB 25 to RMB 5,036/mt, during the day trading session.
Bearish sentiment for second half of the year
Market participants had some concerns over the steel demand in the rainy season after heavy rainfall is being forecasted by the Chinese meteorological department in southern China toward end-June – early July period.
Moreover, trade participants also expected more active state intervention on the steel production and commodities during the second half of the year.
As previously, the Chinese authority aimed to reduce steel production this year, in replacement of higher imports of semi-steel products to comply with green initiative in reducing emissions.
Buildup of rebar stock amid slow consumption
Other signs of slow steel demand were reflected in the high stockpiles buildup of hot-rolled coil (HRC), as traders’ inventories reached three-month high at 2.79 million mt as of Jun 24, up 3.5% on-week.
The high rebar stocks caused the domestic price of Chinese rebar to fall for the third consecutive week to RMB 4,966/mt, down RMB 160/mt on-week, as of Jun 25, indicating weakness of construction steel demand.
Meanwhile, Mysteel recorded higher iron ore shipment from Australian and Brazilian suppliers at 27.7 million mt, a three-month high and up 14.6% on-week, during the Jun 21-27 period, which might ease the supply tightness of iron ores among Chinese ports.