Iron ore futures continued its downward slide on market uncertainty over steel demand amid sintering restrictions.
The futures of Dalian Commodity Exchange (DCE) for January delivery then dipped by 1.50% day-on-day or down RMB 10.50 to RMB 689.50/mt, during the day trading session on Friday.
The rebar futures also dropped by 6.54% day-on-day or down RMB 343 to RMB 4,900/mt, during the day trading session.
Low steel output amid sintering curbs
Chinese blast furnace capacity utilization remained low to an average of 80.05% during the Oct 15-21 period, down 0.1% on-week, according to Mysteel.
The low capacity utilization reflected stringent sintering curbs in Tangshan and Wu An, where mills were asked to reduce operation capacity by 50% for those mills that had more than two sintering plants till Oct 27.
In the meantime, mills with only one sintering plant were required to shut them down at night to comply with stricter environmental efforts.
More lump demand during winter season
Some trade participants expected further decline of steel demand in line with traditional off- peak period for winter season.
However, the winter sintering curbs were likely to increase demand of lump usages, in view of the tight supply of pellet in both domestic and oversea market.
Similarly, the lower iron ore concentrates production might push lump premiums further upward, amid the sintering restrictions in major steelmaking hubs.