Iron ore futures faced slight correction after recent rally as buyers paused from procurement in waiting for clearer market directions.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange went down by 1.63% day-on-day to RMB 844 per tonne, following a market selloff session.
In the meantime, the steel rebar contract on the Shanghai Futures Exchange stayed rather flattish until a selloff at closing and went down slightly by 0.85% day-on-day to RMB 3,719 per tonne.
High iron ore arrivals in Chinese ports
The correction reflected market sentiments on easing supply tightness among Chinese ports due to high volume of shipment arrivals.
According to Shanghai Metal Market (SMM), a total of 14.1 million mt of iron ore had arrived at major Chinese ports during the period of Aug 30- Sep 5, up 520,000 mt week-on-week and up 3.25 million mt on yearly basis.
Most of the iron ore arrivals were destinated for steelmaking hub like Tangshan and Tianjin port, while there was decline for Shandong with shortfall of 1.2 million mt on weekly basis.
Despite the high cargo arrivals, there was some declines in Australian originated iron ore deliveries which recorded at 14.45 million mt for the week, down 1.53 million mt week-on-week due to terminals’ maintenance.
Likewise, the Brazilian shipments also fell by 670,000 mt week-on-week to 7.6 million mt for the week ended at Sep 5, based on SMM estimate.
Strong domestic demand limits Indian exports
India’s steel exports dropped in August due to strong domestic demand that consumed most of its steel production.
According to the country’s Joint Plant committee data (JPC), the country’s finished steel exports slipped by 25% month-on-month to 1.04 million mt in August as compared to 1.37 million mt recorded in July.
In catering for the high domestic steel consumption, some Indian mills were heard to delay August steel exports till much later dates like September or October shipments.
Therefore, the case of Indian steel demand was rather similar to China’s thriving domestic steel demand that made China an overall net steel importer with little volumes left for exports.