Iron ore futures ended the bullish run after iron ore prices reached a six year high recently on robust Chinese steel demand.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange dropped by 1.40% or RMB 12 day-on-day to RMB 848 per tonne on Thursday.
Similarly, the steel rebar contract on the Shanghai Futures Exchange also went down by 1.54% or RMB 59 day-on-day to RMB 3,765 per tonne.
Cooling down from growing supply
The strong buying interests came to halt as buyers were more cautious as iron ore prices headed toward $130/mt mark.
Some trade participants expected the supply tightness of medium grades fines to ease among Chinese ports inventory with the arrival of more shipments.
According to Shanghai Metal Market, the arrival of iron ore shipment to China had increased by 2.16 million tonnes week-on-week to 14.81 million tonne for previous week.
Moreover, the Chinese port authority is addressing the port congestion issues and the bottlenecks are expected to improve by end of August, allowing more offload of iron ore cargoes.
Lower monthly rebar output in July
There was also some slowing down of Chinese rebar output for July, which recorded 23.9 million tonnes, down 2.2% on monthly basis, according to the country’s National Bureau of Statistics (NBS).
Despite the lower monthly rebar output, the production level in July still grew on a yearly basis at 5.3% as compared to July 2019.
Going forward, some market participants expect higher production levels for the Sep-Oct period as it is typically peak demand season for steel finished products.