Iron ore futures ended the day session higher, supported by the better steel margins and positive economic data from China.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange rose further by 1.11% or RMB 10 day-on-day to RMB 911.50/mt on Monday.
The steel rebar contract on the Shanghai Futures Exchange, however dipped slightly by 0.56% or RMB 22 day-on-day to $3,906/mt.
Higher PMIs from China
China’s steel PMI rose by 3.5 basis points on-month to 49.3 readings in November, according to CFLP Steel Logistics Professional Committee.
The uptick was due to strong steel demand in the country that resulted in high restocking activities of iron ores, during the second half of November 2020.
Moreover, steel margins were heard to remain high at around RMB 300/mt, which buoyed iron ore benchmark prices that broke the $130/mt mark for the second time of the year since September.
Moreover, the country’s official PMI for China’s manufacturing sector reached 52.1 in November, up from 51.4 in October and marked the ninth consecutive month of growth above the 50 readings for economic expansion.
Softening rebar demand ahead
Despite the good economical indicators, some trade participants expect China’s construction activities to slow down in upcoming winter season, which lowered the demand of building materials like rebar.
Thus, Mysteel expects the prices of rebar to further soften over the Nov 30- Dec 4 period, in view of the colder weather at northern China that affected construction activities.
Even though, the price of HRB400 20mm dia rebar managed to rise by RMB 6/mt on-day to RMB 4,113/mt, as of Nov 27.