Iron ore futures fell for the second consecutive trading day, as steel demand slowed for the upcoming political party celebration and poor economic indicators.
The futures of Dalian Commodity Exchange (DCE) for September delivery then dropped down by 0.72% day-on-day or RMB 8.50 to RMB 1,165/mt at the close of day trading session on Wednesday.
The rebar futures however, managed to stay afloat and inched up by 0.86% on-day or up RMB 44 to RMB 5,147/mt, during the day trading session.
Slow steel demand in July
Market activities slowed down ahead of the Chinese political party’s 100th anniversary celebration in Jul 1, as mills reduced production to improve air quality.
Steel outlook was also expected to be bearish for the upcoming month, given the heavy rainfalls forecasted in southern China that dampened steel demand.
However, the falling domestic rebar prices had stabilized by end-June after 10 consecutive working days of decline. As Mysteel assessed the HRB400E 20mm dia rebar at RMB 4,948/mt on Jun 29, up RMB 1/mt on-day.
China’s PMI dip slightly in June
Market sentiment was further dampened by lower official Purchasing Managers’ Index (PMI) in June with a reading of 50.9, down slightly from 51 points recorded in May.
The official PMI was lowered by power supply shortages that slowed the expansion of manufacturing production during the month of June.
Some trade participants linked the lower manufacturing activities to the supply shortage of industrial inputs like chips, which were in a global shortage.
Meanwhile, the resurgence of Delta Covid variant among Asian countries also added on to the supply constraint that indirectly affected Chinese manufacturing activities.