Iron ore futures inched closer to the $1,000/mt mark, due to good industrial output indicator from China, despite lower crude steel production recorded in November.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) then rose by 1.48% day-on-day or RMB 14.50 to RMB 994/mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange, also hiked up by 1.17% or RMB 47 day-on-day to RMB 4,073/mt.
Growing industrial output but slow crude steel production
China’s industrial output grew for the consecutive eight months to record a yearly growth of 7% in November, indicating high steel demand in the sector.
However, the country’s crude steel production seemed to slowdown in November at 87.66 million mt, down 5% on-month, but up 9% on-year.
The mixed indicators drew some market concerns over the country’s economic recovery to pre-Covid 19 level, as well as risk of credit defaults in some of its huge corporations.
Low rebar production ahead of winter season
Meanwhile, China’s rebar production dropped to an eight-month low, implying lesser construction demand during the winter season.
According to Mysteel, the rebar production went down 1.2% on-week and down 3% on-year to 3.56 million mt for the week ended at Dec 9.
The low production was attributed to maintenance period conducted by steelmakers for year-end to reduce emission in compliance with the environmental regulations.
Thus, the price of HRB400 20mm dia rebar dropped further by RMB 12/mt on-day to RMB 4,128/mt, due to lesser demand for construction activities in northern China.