Posted on 21 Jun 2022
Chinese futures prices of major ferrous commodities including steel, iron ore, coke and coking coal continued plummeting on June 20, with the most-traded iron ore contract on the Dalian Commodity Exchange (DCE) for September delivery hitting its daily limit down of 11% when the daytime trading session ended. Market sources blamed weakening domestic steel demand and bearish sentiment for the continuing plunge in ferrous futures prices.
On Monday, the most-traded rebar and hot-rolled coil contracts on the Shanghai Futures Exchange (SHFE) both for October delivery closed at Yuan 4,149/tonne ($621/t) and Yuan 4,220/t respectively, down for the sixth consecutive day by another Yuan 264/t and Yuan 295/t from their settlement prices on Friday.
And the prices of key steelmaking inputs posted even more substantial declines. For example, Monday's retreat saw the DCE's September iron ore contract lose Yuan 92/t from last Friday to close at Yuan 746/dmt.
Meanwhile, the Dalian bourse's most-traded September contracts for coke and coking coal also extended their losses by another whopping 11.5% and 10.6% from Friday to close at Yuan 2,921/t and Yuan 2,322/t on Monday.
"The market sentiment has been more pessimistic today (because) the dull demand for finished steel is the reality," a Shanghai-based analyst with a futures company commented. "The negative mood has shifted to domestic steel prices and further to the demand for steelmaking raw materials, when some steelmakers began reconsidering the pace of their operations amid the meagre steel margins," he said.
Just on Sunday, the Tangshan Q235 150mm square billet price in North China's Hebei province, a barometer of China's steel market sentiment, dropped by another Yuan 100/t to reach Yuan 4,080/t EXW and including the 13% VAT – only two days after the sharp fall of Yuan 200/t last Friday, according to Mysteel's assessment.
As for supplies of raw materials, especially iron ore, these have seen gradual improvement. Coupled with the downward risks in the global economy, both factors further dampened market sentiment, Mysteel Global noted.
Source:Mysteel Global
