Iron ore futures slumped throughout the session and closed lower due to high iron ore port inventory and output restriction in Tangshan.
Thus, the most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange nosedived since market opening by 3.14% day-on-day to RMB 771.50 per mt on Friday.
The steel rebar contract on the Shanghai Futures Exchange followed suite and dropped 1.01% day-on-day to RMB 3,616 per mt.
Prices come under pressure from high port inventory
According to Mysteel, China’s iron ore port inventory remained high at 124.16 million mt, up 1.77 mt week-on-week for the week ended at Oct 23.
The high port iron ore stockpile continued to place pressure on further upward price movement, while steel demand had been slowing in China, as the peak construction period came to an end by October.
However, the Chinese major mills’ steel stocks recorded a dip of 3.2% week-on-week to 6.4 million mt as of Oct 21, due to steady recovery of ‘white goods’ demand which achieved positive growth over Jan-Sep period.
Going forward, China’s National Bureau of Statistics expected a growth in the production and sales of home appliances in Q4, due to various year-end promotional events that drives consumption.
Curb on Tangshan production
Steel production came under scrutiny in China’s largest steelmaking hub of Tangshan due to production curb imposed by Chinese authority on Friday, Oct 23.
Market participants also expect further sintering cut during the winter period, which lifted demand for pellets and iron ore products with low alumina contents.
There were also some buying interests for Mac fines, Newman fines and PBF, due to the recent price corrections of iron ore products from higher port inventory and thinner steel margins.