Iron ore futures opened low but managed to catchup at the afternoon session before closing at slight dip for the day.
Thus, the most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange were almost flattish and booked a small loss of 0.83% or RMB 7 day-on-day to RMB 832.50/mt on Friday.
The steel rebar contract on the Shanghai Futures Exchange followed similar trading pattern and closed flat at RMB 3,840/mt.
Declining steel prices
The price of the HRB 400 20mm dia rebar finally inched down by RMB 4/mt to RMB 4,120/mt on Nov 12, after a bullish run for 11 working days.
The decline of the rebar led market participants to doubt if the catch-up of construction activities before winter season had slowed down.
Nevertheless, the lower steel stocks offered some support to rebar prices, as Chinese mills’ steel stocks dropped to a 10-month low of 5.2 million mt during the Nov 5-11 period, down 9% week-on-week, according to Mysteel’s survey of 184 steel mills..
In the meantime, the port iron ore inventory also dropped by 338,000 mt week-on-week to 127.77 million mt for this week, which might lend some support to iron ore prices over near term.
Profit-taking in the paper market
There was also some profit-taking in the paper market as some trade participants doubted on the strength of Chinese downstream demand in view of the upcoming winter season.
Meanwhile, more Chinese mills adopted more cost savings measures, preferring medium grade fines due to its cost-efficiency over the high-grade and low-grade combination.
Thus, some of mills also prefer low grade Yandi fines over Indian fines, due to its compatible blending with Australian medium grade fines at the blast furnace mix.