China steelmaking ingredients drop on expectations of output controls

BEIJING: Futures of steelmaking raw materials on the Dalian Commodity Exchange dropped on Wednesday, with the benchmark iron ore retreating after two straight sessions of gains, on expectations of production cuts at steel mills.

“Recently the anticipation of reducing crude steel output has made a comeback,” SinoSteel Futures said in a note, adding that some local governments have issued related documents although details are pending further notice. Market participants have started to trade based on the expectation for lower output, while iron ore fundamentals also not supporting big gains in its prices, according to SinoSteel Futures.

The most actively traded iron ore futures on the Dalian Commodity Exchange for September delivery fell 1.3percent to 1,215 yuan ($187.80) per tonne as of 0330 GMT.

Coking coal futures on the Dalian bourse declined 2.8percent at 1,924 yuan a tonne. Coke prices slid 3.3percent to 2,596 yuan per tonne. They plunged 4percent earlier during morning session. Steel prices on the Shanghai Futures Exchange, however, rose.

Construction used rebar, for October delivery, rose 1.8percent to 5,358 yuan a tonne.

Hot rolled coils, used in the manufacturing sector, jumped 2.4percent to 5,693 yuan per tonne.

Shanghai stainless steel futures, for August, delivery, dipped 0.6percent to 16,675 yuan per tonne.

Spot prices of iron ore with 62percent iron content for delivery to China increased by $1 to $222 per tonne on Tuesday, according to SteelHome consultancy.

China’s state planner said it aims to boost steel scrap usage by 23percent in the next five years to 320 million tonnes to increase supplies and meet the country’s climate goal.