DCE went downhill on Tuesday, due to easing of supply from higher shipments from miners.
The most-traded January 2020 iron ore contract traded at RMB 609 a tonne, down 2.17% on-day, after traded at day-high of RMB 622 a tonne before dropping to day-low at RMB 609 a tonne.
Rebar contract then traded at RMB 3,699 a tonne, down 0.80% day-on-day, following the decline of iron ore.
Rising shipments from miners
The supply concern for iron ore seemed to ease among buyers due to rising exports from iron ore suppliers.
For instance, Brazil’s Vale exports of iron ore rose by 16.6% month-on-month, during the month of July, as China recorded a surge of iron ore imports in July, up 21% on-month at 91.02 million tonnes against 75.18 million tonnes recorded in June.
The higher import volume had caused the Chinese port inventory to swell above the 120 million tonnes level recently, since last seen in early June.
Paradigm shift toward low grades and high grade ores usage
Going forward, Chinese mills may seek for more low grade ores and high grade ores as feedstocks for their blast furnace mix.
The rationale for the shift was for mills to cut costs in using the cheaper grades and to comply with stricter output cuts in Tangshan.
So far, all of Tangshan-based mills were asked to half or cut their sintering operations by 50% in a new ruling as compared to the 20%-50% seen in the month of August.
Except for three mills namely, HBIS Tangsteel, Huaxi Steel and Guoyi Special Steel, which were granted to operate one to two plants each respectively, based on findings from Mysteel consultancy.