Iron ore futures slid at the start of the week, after the recent rally last week that pushed iron ore prices to a record high.
Thus, the most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange dropped by 1.83% or RMB 15.50 day-on-day to RMB 832.50 per tonne on Monday.
However, the steel rebar contract on the Shanghai Futures Exchange stayed almost flat and inched by 0.03% or RMB 1 day-on-day to RMB 3,781 per tonne.
A cooldown of buying interests
Some of the market participants felt that the iron ore prices had came up too high after the recent rally, while the steel prices had not risen in tandem.
Thus, this reduced steel margins and some of Chinese mills were considering to lower down their usage of sintering fines and increase their frequency of maintenance period just before the peak season of Sep-Oct period.
Meanwhile, some trade participants expected further price corrections for Brazilian Blend fines with the arrival of shipments to China from Vale’s Teluk Rubiah Maritime Terminal in Malaysia.
Steel output recovery in India
Outside of China, there was also some recovery for Indian steel production in the month of July amid the coronavirus pandemic.
According to the country’s Joint Plant Committee, India’s crude steel production recovered in July with total production at 8.08 million mt, up 7.5% on monthly basis, but down 15% at year-on-year comparison.
The higher July’s output was attributed to higher domestic steel demand in India, as automobile industry achieved higher production at 1.72 million units in July, up 58% month-on-month but down 29% on yearly basis.
During the month of July, India also doubled its finished steel exports at 1.38 million mt compared to same period last year, due to significant increase of finished steel exports to China, Spain and Italy.