Iron ore futures closed on the high due to increased steel production and stable steel demand in China.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange then rose slightly by 0.32% day-on-day to RMB 789 per mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange however, dipped slightly by 0.30% day-on-day to RMB 3,616 per mt.
Higher crude steel output in China
According to National Bureau of Statistics (NBS), China’s crude steel output recorded at 782 million mt over the Jan-Sep period, up 4.5% year-on-year, as compared to the rise of 3.7% on-year growth for the first eight months of the year.
The higher production was due to consistent demand for long steel products in October, which is a typical peak season for construction activities in China.
Thus, the country’s national price of HRB400 20mm dia rebar rebounded by RMB7/mt day-on-day to RMB 3,815/mt on Monday, however the Tangshan billet prices decreased by RMB 20 to RMB 3,400/mt by Tuesday.
More demand for Brazilian fines for winter season
Market participants expected more demand for low alumina Brazilian fines due to the sintering restriction for the upcoming winter season.
However, the price uptick may be hindered by the more arrival of Brazilian iron ore shipments as Mysteel recorded 7.7 million mt of Brazilian shipment over the Oct 12-18 period, up 821,000 mt or 12% week-on-week.
Similarly, Australian iron ore shipments also increased by 9.1% or 1.7 million mt week-on-week to 20.3 million mt over the Oct 12-18 period.
This was in line with 7.2% rise in BHP iron ore production at 74 million mt in at the first quarter or the three months ended in Sep 30, due to stable demand from China.
Going forward, some market participants refrained from purchases in waiting for further price corrections for the product like Pilbara Blend fines, due to market expectation of more mainstream cargoes arrival in November.