Iron ore futures fell to two-month low on the day session, after a selloff from sluggish steel consumption.
The futures of Dalian Commodity Exchange (DCE) for September delivery then slumped by 4.72% day-on-day or down RMB 44 to RMB 888.50/mt, during the day trading session on Thursday.
The rebar futures, however moved flatly and inched up slightly by 0.26% day-on-day or RMB 14 to RMB 5,373/mt, during the trading session.
Weakening steel demand from new sintering curb in Tangshan
Market sentiment turned bearish due to softening domestic steel consumption as Tangshan underwent another round of sintering controls to improve air quality.
Some trade participants expected more steel output cuts to be extended to other steelmaking hubs in near term that further weakened the demand for raw materials.
There was also much reselling of cargoes as mills tried to destock even at a loss in their effort to get rid of excess inventory, amid the low steel margins environment.
Lower automotive sheet demand projected for 2H 2021
China’s auto sheet demand is expected to drop during the second half of 2021, due to chronic chip shortages which showed no signs of improvement in August.
Despite the chip shortage in vehicle manufacturing, the domestic consumption recovery remained slow in the country, while the resurgence of Covid outbreak may worsen consumers’ demand further.
Thus, China Association of Automobile Manufacturers (CAAM) estimated the country’s vehicle sales to reach 14.1 million units for 2H 2021, down 6.3% on yearly basis.
The slowdown of vehicles sales had already occurred during the month of July, with preliminary sales recorded at 1.82 million units, down sharply by 13.8% on-year and 12.4% on-month.