Iron ore futures closed on slight gains after opening lower in the morning session for the start of the week.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange then rose slightly by 0.36% or RMB 3.00 day-on-day to RMB 834.50 per tonne on Monday.
In the meantime, the steel rebar contract on the Shanghai Futures Exchange also went up by 1.22% or RMB 46 day-on-day to RMB 3,832 per tonne.
Rebar and HRC prices expected to ease
The small gains in the futures market may be due to market expectation of prices easing for Chinese rebar and hot-rolled coil (HRC) prices for the week.
Some trade sources expected moderate price correction for rebar prices this week over the Aug 17-21 period, however the HRC prices might stay firm in North China before dipping toward the end of the week.
According to Mysteel, the buyers were more cautious in purchases after the recent rally in the market as the price of HRB400 20mm dia rebar went down by RMB 29/mt or $4.2/mt week-on-week to RMB 3,832/mt on Aug 14.
Acceleration of Chinese infrastructure investment
Despite the expected easing of rebar prices, some market participants remained optimistic of the market.
This was due to the Chinese government looking to speed up infrastructure investment during the second half of the year, which may increase iron ore consumption.
However, the rising supply of iron ores from Australia and Brazil may shorten the iron ore prices rally, with increased iron ore shipment of 43.6 million mt from Port Hedland in July.
Meanwhile, the daily Brazilian iron ore shipments also rose to 1.64 million mt during the first five days of August, from previous daily export of 1.48 million mt recorded in July.
Nevertheless, some trade sources think the rising shipments might be stalled by the port congestion in China, where the vessels in queue across Chinese ports were estimated at an increase of 80-90 vessels since March 2020.