Posted on 10 May 2022
Futures prices of ferrous commodities in China continued to track south on May 9, with the most-traded iron ore contract on the Dalian Commodity Exchange for September delivery plunging by nearly 7% throughout the course of the trading day.
Market watchers attributed the plunge to market pessimism in response to stringent COVID-induced restrictions in many parts of China, together with growing concerns about near-term demand for finished steel and for key steelmaking inputs.
Also on Monday, the most-traded rebar contract on the Shanghai Futures Exchange for October delivery closed at Yuan 4,654/tonne ($691.7/t), slumping for the second day by another Yuan 180/t or 3.8% from the settlement price of May 6. Meanwhile, the bourse's most-active HRC contract also for October delivery dived by Yuan 182/t or 3.7% to close at Yuan 4,748/t.
On the DCE, the most-traded contracts of iron ore, coke and coking coal (all for September delivery) tumbled by 5.8%, 3.9% and 4.5% respectively to close at Yuan 806.5/t, Yuan 3,395/t and Yuan 2,651.5/t on Monday.
"In the domestic iron ore market, sentiment became increasingly bearish today, as concerns mounted regarding iron ore demand in both the immediate future and longer term," an analyst with a trading company in East China's Zhejiang province commented.
"I heard that some traders have been actively selling iron ore stocks at hand – even at less than what they paid – which is further dampening the overall market sentiment," he added.
According to him, Chinese steelmakers have been rather cautious about buying iron ore given the meagre profit margins they'd earn on finished steel. And for the longer term, China's pledge to continue capping the country's crude steel output for another year this year will also constrain domestic demand for iron ore.
"Some corrections in Chinese iron ore prices are foreseeable," the analyst said.
Source:Mysteel Global
