Seaborne iron ore prices gained further on Thursday as firm Chinese steel output has supported a round of spot buying this week. Chinese steel futures lost ground however as data confirmed that restrictions on steelmaking in late August were not enough to push total output below July levels.

The Kallanish index for 62% Fe Australian fines rose by $2.05 to reach $55.75/dry metric ton cfr Qingdao. Two fixed price and two index-linked cargos traded on globalORE, all for October delivery. 90,000 tonnes of Jimblebar Fines sold at $56.9/t cfr Qingdao, while 87,000t of Standard Sinter Feed Tubarão sold for $60/t. Another 90,000t of Jimblebar fines sold at a $1.4/t premium to AT62, a combination of the Argus and TSI 62% Fe indices. 100,000t of PB fines traded at a $3.5/t premium to the Platts 62% Iodex.

The January 2016 rebar contract on the Shanghai Stock Exchange closed down CNY 7/t over the day but still up on Wednesdays close at CNY 1,956/t ($307/t). The same contract for hot rolled coil meanwhile lost CNY 4/t over the day to close at CNY 1,964/t.

Major Chinese steelmakers produced 1.64 million tonnes/day of crude steel over 21-31 August, down -4.43% from the previous ten days, according to the China Iron and Steel Association. A decline had been expected due to restrictions on output ahead of a military parade in Beijing on 3 September. The total decline amounted to around 840,000t of lost output but production during the previous period was higher than normal as mills compensated for the forced downtime. Total CISA steel output in August was in fact still up around 2% to 52.2 million tonnes.

Another slow decline in mill finished steel inventories also points to a weaker picture for steel than for iron ore currently. Mill inventory was down just 0.85% over the eleven days to 15.32mt. The trend is similar to steel market inventories monitored by MySteel, which saw the pace of decline shrink throughout August. Market inventories turned upwards in early September, suggesting mill have struggled to keep pushing their own inventory downwards.