Iron ore futures started the week on softer note, due to declining steel margins and slow demand.
The futures of Dalian Commodity Exchange (DCE) dropped by 5.78% day-on-day or down RMB 49.50 to RMB 806.50/mt, during the day trading session on Monday.
The rebar futures also fell by 3.72% or down RMB 180 day-on-day to RMB 4,654/mt, during the day trading session.
Low Chinese steel exports during Jan-Apr period
The slow steel demand was evident in the Chinese export market, as Jan-Apr finished steel products export volumes dropped yearly, according to the country’s General Administration of Customs.
The latest export data indicated that export volume reached 18.16 million mt over the Jan-Apr 2022 period, down 29.2% year-on-year, as released by the Chinese customs on Monday.
Similarly, the Chinese import of iron ore also dipped by 7.1% yearly to 354.4 million mt over the first four months of the year.
The decline in steel export and iron ore import volumes signified slow steel demand for the Chinese market, with its major cities facing lockdown to control the covid virus spread.
More demand for domestic concentrates among Chinese mills
There was more demand for domestic concentrates among Chinese mills that resulted in the higher concentrates prices in Tangshan recently.
The price upticks were linked to tight supply of imported concentrates that were affected by the Russian-Ukraine war, which led to more Chinese mills to seek for domestic concentrates instead.
However, the lockdown measures in Chinese cities had incurred higher trucking costs, which were heard to be doubled in some regions, according to Platts reports. This higher transportation costs were then passed on to buyers seeking domestic concentrates, especially for the northern Chinese mills.