Iron ore futures rebounded from previous slump on Friday day session, despite market sentiments were dampened by stringent output cuts.
The futures of Dalian Commodity Exchange (DCE) then rose by 1.42% day-on-day or RMB 11 to RMB 786/mt, during the day trading session on Friday.
The rebar futures also went up by 2.37% day-on-day or RMB 125 to RMB 5,408/mt, during the day trading session.
More steams for steel consumptions
Despite the ongoing output cuts, Chinese steel consumption did not drop sharply but moved flatly in a slow decline. As low steel stocks volumes were recorded among Chinese mills at the eve of the steel demand peak season.
According to Mysteel’s survey, the mills’ inventories of the five major steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate recorded 6.2 million mt, as of Sep 1, down slightly by 0.1% on-week, as compared to previous weekly drop at 2.6%.
Moreover, most mills kept their blast furnace (BF) capacity utilization rate relatively unchanged at 85.45% for Aug 27 – Sep 2 period, slightly up 0.15% week-on-week.
Weak iron ore demand for September
The slightly flat steel consumption might not be enough to lift iron ore demand for September and the commodity is likely to undergo a round of correction, according to Mysteel.
Furthermore, the bad weather posed some risks for steel demand with rainy weather and flood concerns in central China, while the resurgence of Covid Delta might slow steel demand, despite in a traditional peak season.
Mysteel also expected more mills to comply with nationwide policy to trim production by state standards or on voluntary basis in view of the weak steel demand.