Iron ore futures moved flattish after a recent market selloff, due to market concerns over slow restocking activities and thin steel margins.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) dropped by 0.24% day-on-day or RMB 2.50 to RMB 1,041.50/mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange however, gained further by 1.39% or RMB 60 day on-day to RMB 4,385/mt.
CISA foresees further growth in Chinese steel demand for 2021
China’s steel demand is slated to grow in 2021, supported by favorable policies from the Beijing government, according to China Iron and Steel Association (CISA).
The association expected the higher steel demand to be met with rising imports of primary steel products like billets, as the Chinese authority planned to reduce steel output in 2021 to cut carbon emissions.
To achieve the higher steel imports, CISA stated that the Beijing policymakers may introduce more incentives for importing steel products in near term.
Meanwhile, China also planned to tackle its steelmaking supply issues by diversifying its iron ore imports through its Simandou iron ore project in Guinea as well as other mining projects by 2025.
China’s daily construction steel sales at 10-months low
China’s daily construction steel sales dropped to a 10-month low, due to lower construction activities amid winter period.
According to Mysteel, the spot sales of construction steel like rebar, wire rod and bar-in-coil, fell by 19.3% or 15,760 mt per day, as of Jan 26.
Despite the low daily sales, the price of rebar managed to rebound to RMB 4,350/mt as of Jan 26, up RMB 4 on-day, due to market expectation of better steel demand during post-Lunar New Year period in mid-February.
Meanwhile, the rebar output was stable among Chinese mills, which totaled at 3.45 million mt over the Jan 14-20 period, down slightly by 0.3% or 8,500 mt on-week, based on Mysteel’s data.