Iron ore futures opened high, but only to dip at afternoon session, due to poorer economic indicators from China.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then dropped by 0.83% day-on-day or RMB 9.50 to RMB 1,132.50/mt on Monday.
The steel rebar contract on the Shanghai Futures Exchange also went down slightly by 0.69% or RMB 32 day-on-day to RMB 4,639/mt.
Lower PMIs in February
China’s manufacturing activities moved at its slowest pace in nine months as reflected on its Caixin IHS PMIs, which reached 50.9 in February, lower than 51.5 readings recorded in January 2021.
Similarly, the country’s official PMI also dropped to 50.6 reading in February 2021 from 51.3 in January, as factory activities continued to expand but at a slower pace and missed market expectation.
The declining indicators were attributed to market inactivity during the long Lunar New Year holidays in February, while export orders had plunged for the second consecutive months due to weak oversea demand.
High rebar demand expected in early March
Despite the lower PMIs, Chinese rebar and wire rod prices are expected to rise during Mar 1-5 from better construction demand, according to Mysteel.
The steel consultancy firm stated that most of the Chinese contractors had resumed the construction projects after the holidays and some even expected some stimulus or supportive measures from the outcome of the Two Sessions meeting to support steel demand.
Hence, the price of the HRB400 20mm dia rebar reached two-year high to RMB 4,688/mt as of Feb 26, up RMB 6/mt, upon market optimism