Iron ore futures experienced a decline on Wednesday, reversing early gains due to renewed discussions regarding China’s plans to cut crude steel production. This development raises concerns over the ongoing oversupply issues within the steel industry. The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) concluded the day 0.32% lower at 769.5 yuan ($106) per metric ton, despite reaching an intraday high of 785 yuan earlier in the session.
Concurrently, the benchmark April iron ore on the Singapore Exchange fell by 0.8% to $99.95 per ton after marking its highest level since March 3, peaking at $102.05 earlier. The decline in iron ore prices coincided with speculation that details about the impending steel output reductions from China would soon be released. The National Development and Reform Commission (NDRC) of China has not commented on these speculations.
Back in March, the NDRC announced its intention to lower crude steel output this year but did not provide specifics regarding the reduction volume or timeline. Some analysts suggest a potential cut of 50 million tons in steel production for the year, which would inevitably reduce the demand for steelmaking feedstocks. Earlier in the day, iron ore prices gained traction as many investors anticipated a rebound in demand following the conclusion of China’s annual parliamentary session.
Additionally, several steel mills that had previously halted operations for maintenance on their blast furnaces gradually resumed activities due to acceptable profit margins and a positive outlook on demand. Steel benchmarks on the Shanghai Futures Exchange also showed gains, with rebar prices increasing by 0.59% and hot-rolled coil prices rising by 0.63%. Moreover, other steelmaking materials on the DCE saw increases, with coking coal up by 0.8% and coke rising by 0.06%.