Iron ore futures continued to plunge down after a selloff at the end of day session on Friday, amid lower steel consumption.
The futures of Dalian Commodity Exchange (DCE) for September delivery then nosedived by 8.14% day-on-day or down RMB 91 to RMB 1,027/mt during the day trading session on Friday.
The rebar futures, however hiked up by 0.99% day-on-day or RMB 56 to RMB 5,737/mt, during the day trading session.
Low steel consumption amid output cuts
Chinese steel demand had slowed down in the lull season with bad weather conditions that affected construction activities.
Due to slower steel demand, the iron ore port inventory went down by 343,400 mt week-on-week to 128.13 million mt for the week ended Jul 30.
Meanwhile, Chinese mills’ steel stocks continued to decline for the fourth consecutive week during the Jul 22-28 period at 6.1 million mt, down 1% week-on-week, as steel production slowed down due to more output cuts.
Steel demand gains traction in ex-China market
Despite the slower steel demand in China, the ex-China market showed signs of improvement from the pandemic.
For instance, the Japanese automakers’ global output went up by 30% year-on-year to 12.2 million mt over the Jan-Jun 2021.
However, the growth was constrained by the shortage of IC chips, if not the global production of Japanese automobiles might hiked up further with higher operation rates of vehicle plants in the US and China.