DCE dips on further easing of supply tightness

Chinese futures suffered a dip on Monday, as market participants seek for market directions amid uncertainty. The most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), saw a slight drop by 0.32% day-on-day to RMB 630 per tonne on Monday. Likewise, the steel rebar contract on the Shanghai Futures Exchange also dipped slightly by 0.14% on-day to RMB 3,452 per tonne.   More Brazilian supply to ease price supports Market participants expect further softening prices of iron ore with more shipment arrival to China, as imports volume grew in the month of April. According to General Administration of Customs, China’s iron ore imports rose by 11.4% month-on-month to 95.71 million tonnes in April. Even the supply tightness in Brazilian ore seemed to ease as well, as the country’s Ministry of Industry, Foreign Trade and Services reported a surge in exports for April 2020. Based on the ministry, Brazil shipped 24 million tonnes in April 2020, up 28.2% year-on-year and a two-month high, due to better weather conditions.   Slow exports volume from Port Hedland On the contrary, Australia’s Port Hedland seemed to ship lesser iron ore in the month of April as compared to their Brazilian counterpart. In April, Port Hedland shipped 45.3 million tonnes of iron ores, down 3.1% month-on-month, after a double-digit surge of 21% recorded in March, based on data from Pilbara Ports Authority (PPA). The dip in April shipment were attributed to slower exports from BHP and the Fortescue Metals Group (FMG) which both miners export nearly 38.7 million tonnes or 85.6% of the total exports in April. Perhaps, the lesser shipments from BHP and FMG were due to the high port inventory stacked among Chinese ports, which recorded around 111.89 million mt, based on Mysteel’s survey of 45 ports in early May. Chinese buyers had the tendency to purchase from the port stocks first, and thus the drawdown resulted a dip of 1.46 million tonnes on-week to 62.27 million tonnes of Australian iron ores among Chinese ports.