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China’s ferrous commodities slide across the board on Thursday after the recent rally.
The most-traded iron ore futures contract on the Dalian Commodity Exchange, for September delivery, tumbled by 4.8% to close at 756 yuan per tonne, coking coal down 4.65% to 2,133 yuan per tonne and coke down 3.6% to 2,846 yuan per tonne.
The most-traded October contract of steel rebar futures on the Shanghai Futures Exchange declined 2.86% to close at 3,980 yuan per tonne, hot-rolled coil down 2.4% to 3,957 yuan per tonne and wire rod down 1.8% to 4,476 yuan per tonne.
Ferrous commodities have rebounded significantly recently, with futures of steel rebar, hot-rolled coil, iron ore, coking coal and coke rebounding by 6%, 6%, 18%, 15% and 14%, respectively, from the recent low, according to a note from China International Capital Corporation (CICC) on Wednesday.
The main driving force of the price rebound was improving expectations of steel demand and falling inventories after steel production cut, it said.
As of August 1, average prices of Grade 3 steel rebar （Φ25mm）in China’s 10 major cities stood at 4,208 yuan per tonne on August 1, rising by 8.5% from 329 yuan per tonne on July 15, while the most-traded steel rebar futures contract on the Shanghai Futures Exchange, for September delivery, increased by more than 500 yuan per tonne during the same period, according to data compared by Lange Steel.
Looking ahead, as September and October, a traditional high season for steel consumption, approaches, steel demand could recover further which will likely boost prices of steelmaking commodities, it said.
However, the bank noted that steel demand for infrastructure construction may pick up, while the demand from the real estate sector is expected to remain sluggish. In the third and fourth quarter of the year, average weekly apparent consumption of steel rebar is expected to be 3.15 million tonnes and 3.08 million tonnes, it estimated.
