The trading week opened to extremely lackluster response from the buying front, with mills and traders both shrinking back from spot commitment for fear of a further plunge in prices. Weakening steel prices also contributed to the pull-back in buying interest.
Platts assessed the 62% Fe IODEX at $87/dmt CFR North China, $1/dmt down from Friday.
"The large international traders still have a lot of cargoes they have yet to sell off, and the medium and smaller ones don't dare to buy more because sentiment is so negative," a Shanghai-based trader said. "Overall, very little material is actually changing hands and there is really no buying interest at all."
The trader added that he did not think there would be a sustained rebound in prices to come, even as the seasonality became more conducive for steel consumption in the construction and infrastructure development sectors.
"I doubt there will be much of a recovery at all in September and October as the supply overhang of seaborne cargoes this year is a big issue. Prices can't lift because of that."
Lackluster steel performance also had a part to play in sentiment remaining pessimistic.
Physical spot prices of steel square billet in Tangshan lost Yuan 30/mt from Friday to conclude at Yuan 2,520/mt ($408.50/mt) ex-stock Tangshan, a Chinese trader said.
Shagang Group, China's largest private steelmaker located in eastern China's Jiangsu province, said Monday it would shave its rebar ex-works prices for the September 1-10 period by Yuan 100/metric ton ($16/mt), the largest-ever cut since a Yuan 130/mt price cut on January 11 this year.
Reflecting a sharp fall in spot prices over the past 10 days, Shagang's latest cut brings its price for 16-25mm diameter HRB400 rebar to the lowest this year, at Yuan 3,000/mt ($488/mt) including a 17% VAT.
A steelmaker in the north added that they were "totally not interested" in seaborne cargoes currently as they were relying on term volumes to tide them over and only waiting on the sidelines to see how the market would move for seaborne material.
"In any case, we are keeping our ore inventories as low as possible, the same as most other mills are doing."
A Hebei-based steelmaker said that mills were still making enough margins from steel sales to enable them to have "enough ready cash" to buy cheaper port stocks instead of seaborne shipments.
"But if steel prices keep going down the way they are, then even that cashflow is going to come under more threat and buying will die down even more."
Port stocks of 61%-Fe Australian Pilbara Blend fines in Qingdao, northern China, were heard to be trading at Yuan 590/wmt ($83.25/dmt on an import parity basis) free-on-truck, including Yuan 35/wmt in port charges and 17% VAT.
Meanwhile, the futures markets dipped Monday after a short-lived boost Friday.
Iron ore futures on the Dalian Commodity Exchange were stable, with the most actively traded January contract closing at Yuan 620/dmt ($100.50/mt), down Yuan 8/dmt from Friday, and settling at Yuan 621/dmt, down Yuan 6/mt on the day.
Steel rebar futures fared the same, with the most liquid January contract in Shanghai last trading at Yuan 2,915/mt ($472.50/mt), down Yuan 25/mt from Friday, and settling at Yuan 2,924/mt, down Yuan 13/mt on the day, according to a Chinese steelmaker.
