Iron fell by up to 11 percent in the futures markets on the first trading day of the week, giving back their profits this year as steelmakers' blast furnaces remained empty amid growing pessimism about the demand outlook in China.
The metal used in steel production carried its decline to the eighth day, losing almost 20 percent in value. Again, metallurgical coal prices used in steel production have lost 9 percent since February.
It is stated that iron consumption has been severely hit by the real estate market in China and the country's coronavirus measures.
While there was optimism last month that economic activity will pick up with signs of the pandemic easing, that has changed due to extensive testing and the constant threat of new shutdowns.
While blast furnace production rates in Tangshan fell to their lowest level since mid-May last week, Mysteel said in a passing note that more steelmaking plants have taken a production shutdown due to lower margins and have taken a maintenance decision.
An index of steel profits in China has dropped around 90 percent so far this month.
“Steel production rates dropped drastically as more steelmakers lost money due to low spot trade and took scheduled maintenance ahead,” said Wei Ying, Iron Analyst for China Industrial Futures . recovery is possible,” he said.
Wei pointed out that daily spot trade in construction-related steel products is between 11 and 13 million tons, but this figure is generally around 17-19 million tons.
In another note, Mysteel said that downside demand remains weak, with a few spot trades taking place, and the gloomy outlook for the Chinese construction sector continues to test market confidence.
It was noted that a series of supportive policy measures taken from Beijing in the last few months did not result in permanent price increases in the market due to the risks arising from the virus and Zero-Kovid policy.
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