Ferrous commodities extended losses on Chinese futures market on Tuesday, at smaller declines compared to Monday. Benchmark iron ore contract for January delivery traded on Dalian Commodity Exchange (DCE) ended 1.9 percent lower at 360.5 yuan/tonne on Tuesday daytime session, while the contract dropped to daily limit-down soon after Monday opening.
Bellwether rebar contract for January delivery traded on Shanghai Futures Exchange (SHFE) ended 1.83 percent lower at 1,933 yuan/tonne on Tuesday, while it slumped 4.82 percent on Monday. The Caixin China Manufacture Industry PMI for August dropped to the lowest record since the measurement came out in March 2009, dampening market sentiment on the country's demand for raw materials such as steel and iron ore.
On Monday, the imported iron ore price index compiled by China Iron and Steel Association, a measurement on spot price of imported iron ores, plunged 3.47 percent to 198.85. Global leading iron ore miners, such as Rio Tinto, BHP Billiton and FMG, all produced more iron ores in the second quarter than in Q1, making the supply glut continue on the global market.
Spot steel prices in China retreated again this month, after steelworks added production on higher profits in early August. According to statistics from CISA, China's major steelmakers increased daily crude steel production by 5.45 percent in Aug. 1-10 compared to that in July 20-31. The lower steel prices are expected to lead to a weaker demand for iron ores in the short term.
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