Iron ore futures opened high but closed lower due to market concerns over lower demand from output restriction in Tangshan.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange then dipped slightly by 0.43% or RMB 3.50 day-on-day to RMB 814.50 per tonne on Thursday.
Meanwhile, the steel rebar contract on the Shanghai Futures Exchange gained slightly by 0.24% or RMB 9 day-on-day to RMB 3,717 per tonne.
Lesser interests for medium grade fines
Due to the ongoing environmental production curb in Tangshan, there were more enquiries on high grade fines, lumps, pellets and concentrates.
As mills tried to reduce dependency on medium grade ores and seek to increase the blending for high grade fines with lower grade fines instead.
It was heard that there was a rising number of Indian fines shipment, waiting for arrival to China in meet growing demand for lower grade fines.
High steel production in mid-August
According to China Iron & Steel Association (CISA), China produced an average of 2.98 million mt of crude steel per day during the Aug 10-20 period, up 5.34% on yearly basis.
The higher daily output was driven by strong infrastructure construction activities for the coming months, though there were some concerns that downstream demand might not be able to support higher rebar prices due to thinner margins.
Going forward, the high crude steel production may carry over into September as well, following the end of the rainy season in southern China and entering toward the peak construction season in Sep-Oct period.