Iron ore futures started the week on bullish note and seemed to break the RMB 1,000/mt mark by the end of week on this market momentum.
Thus, the most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange rose further by 1.57% or RMB 15 day-on-day to RMB 967.50/mt on Monday.
Then, the steel rebar contract on the Shanghai Futures Exchange, was inching closer to the RMB 4,000/mt level as it closed at RMB 3,980/mt, up 2.55% or RMB 99 day-on-day.
Crackdown on illegal transactions
The rally was not greeted by much joy but instead warnings from the exchange citing on Sunday that it had begun to investigate on the recent rally to crackdown on any illegal transactions.
Other industry body like the China Iron and Steel Association (CISA) also stepped in, stating that the recent rally was speculative in nature and did not follow the market fundamentals of supply and demand.
According to CISA, there was some abnormal biddings done by traders to jack up market prices to fuel index growth, which in turn, raised operational risks in the industry.
Mixed movements for rebar and HRC for the week
China’s rebar prices are expected to move downward for the week, as construction activities slowed at the northern regions of the country.
According to Mysteel, the price of HRB400 20mm dia rebar went down for the fifth consecutive working day by RMB 17/mt on-day to RMB 4,044/mt, as of Dec 4.
However, the prices of hot-rolled coil (HRC) may have more room for improvement, due to the robust steel demand for the automobile and manufacturing sectors, which supported firmer domestic prices for HRC.
Meanwhile, the blast furnace capacity utilization among China’s 247 steel mills showed a slight dip 0.07% on-week to 92.4% for the Nov 27-Dec 3 period, probably affected by the colder weather in north China that decreased construction steel demand.