Iron ore futures stayed rather flattish due to a slowdown in steel demand and lower steel prices.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange dipped slightly by 0.65% day-on-day to RMB 766.50 per tonne on Wednesday.
However, the steel rebar contract on the Shanghai Futures Exchange saw a slight gain by 0.17% day-on-day to RMB 3,542 per tonne.
Slow rebar demand
Rebar demand had entered a slow phrase in China, due to the lower-than-expected domestic steel demand in China.
Due to slow consumption, the rebar stocks remained high at 8.8 million mt as of Sep 17, up 5.3 million mt as compared to corresponding period last year, according to Mysteel’s data.
In the meantime, the average rebar capacity utilization rate was almost flattish, spotting a slight gain of 0.2% week-on-week to 81.7% of utilization rate.
As such, the steel consultancy, Mysteel assessed the average price of HRB400 20mm dia rebar at RMB 3,768/mt, down RMB 12/mt day-on-day, as of Sep 22.
Better demand after Golden week holidays
Despite the slow steel demand, some market participants are hopeful that demand will gradually pickup later in the post-National Day holidays in early October.
As some of the current steel demand were held up by new round of output cuts in Tangshan starting on Sep 19.
Nevertheless, there was still a slight increase of daily steel output among Chinese mills, which recorded at 2.15 million mt per day, up 1.9% year-on-year over the Sep 11-20 period, according to China Iron & Steel Association (CISA).