Iron ore futures dropped further after a market selloff on lower steel prices amid the easing of supply tightness.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange dropped by 5.07% day-on-day to RMB 796.50 per tonne on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange also followed the downtrend and fell by 1.79% to RMB 3,575 per tonne.
Lower output fails to support rebar prices
Chinese rebar prices continued to drop throughout the week, as Mysteel assessed the price of HRB 400 20mm dia rebar dropped by RMB 6/mt day-on-day to RMB 3,823/mt as of Sep 15.
The lower weekly rebar output failed to support higher rebar prices, as China’s weekly rebar production went down by 2.8% or 107,800 mt week-on-week to 3.7 million mt over the Sep 3-9 period.
The lower weekly output was due to the scheduled maintenance of steel mills, especially among steelmakers based in Hebei and Jiangsu provinces.
Some trade sources also highlighted that the low intakes of rebar products were due to the slowdown in downstream demand.
More vessel arrivals to ease supply tightness
Besides the slowing demand, the high iron ore shipments arrivals to China also eased the supply tightness that supported the previous price rally.
According to Shanghai Metal Market, there was a weekly increase of 540,000 mt of iron ore shipment arrivals to China at 14.64 million tonnes for the week ended at Sep 11.
Due to the high shipment arrival, the iron ore port inventory went up by 824,600 mt week-on-week to 114.56 million mt as of Sep 11, based on Mysteel’s data.