Iron ore futures slipped slightly on Thursday, for correction after the recent rally amid mixed market outlook.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange dipped by 0.84% or RMB 7/mt day-on-day to RMB 826.50 a tonne.
Likewise, the steel rebar contract on the Shanghai Futures Exchange also dropped by RMB 36 or 0.96% at RMB 3,703 per tonne.
China’s GDP grows at 3.2% in Q2
Amid the coronavirus pandemic, China’s GDP surprised market experts and grew at 3.2% for Q2, beating forecast of 2.5% and rebounded from the negative 6.8% seen in Q1.
Thus, some market participants expect the Chinese economy only to see positive growth for 2020 among the major economics, as its economy made a fast recovery from the pandemic.
There were other positive economic indicators as well, such as the country’s industrial output that rose by 4.8% year-on-year for June 2020.
However, retail sales fell for the five straight months to 1.8% on-year in June, while fixed asset investment slumped 3.1% on-year for the first six months due to the impact of coronavirus.
There was also renewed trade tension between the US and China after the former threatened sanctions over South China Sea.
Lower outputs from miners
South Africa’s Kumba Iron Ore produced 17.9 million mt for the first six months ended on June 30, down 11% on-year, due to effect of COVID-19.
As such, the miner suffered a dip of 19.6% in production during Q2, as the country introduced lockdown measures to curb the coronavirus spread.
Trade participants were also worried that there might be similar output reduction among Brazilian miners as the country’s affected coronavirus cases hit almost 2 million by mid-July.