Iron ore futures rose slightly amid choppy trading session, due to market concerns over supply tightness and rising coronavirus cases.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) then rose by 0.29% on-day or RMB 3 to RMB 1,033/mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange, however dropped by 0.32% or RMB 14 day on-day to RMB 4,377/mt.
Higher steel PMI recorded in Hebei amid rising coronavirus concerns
China’s Hebei steel PMI hiked up further in December, for the eighth consecutive month of growth, according to Hebei Metallurgical Industry Association.
During December, the steel PMI for the country’s largest steel manufacturing province rose to 51.9 readings, up 0.9 basis points month-on-month.
However, some market participants expected the tougher coronavirus containment measures to affect steel demand in the province over the near term.
By Wednesday, the Chinese authorities had imposed travel restrictions and banned mass gatherings in Hebei province, after previously declared the province to enter a ‘wartime mode’ on Tuesday due to rising new cases of Covid-19.
High grade ores gain more popularity among Chinese mills
Meanwhile, more buyers sought for high grade ores like Carajas fines, due to its low alumina and high Fe content that reduced the usage of the more expensive coke in the blast furnace mix.
Trade participants also considered possible supply tightness of the Brazilian fines during Q1 2021, due to rainy season that might disrupt iron ore output and shipments.
In the meantime, the demand for high grade ores remained firm as end-users continued to restock in anticipation of robust downstream demand in post-Lunar New Year at mid-February 2021.