Iron ore futures continued to move downtrend on lower steel, despite a late rally at the afternoon session to regain some lose grounds.
The futures of Dalian Commodity Exchange (DCE) for January delivery then fell by 2.36% day-on-day or down RMB 16.50 to RMB 683.50/mt, during the day trading session on Thursday.
The rebar futures also dropped by 1.28% day-on-day or down RMB 61 to RMB 4,712/mt, during the day trading session.
Falling steel prices amid bearish Q4
As the steel market reached its traditional off peak winter season, most of the steel prices followed downward trajectory, with Tangshan billet prices recorded under the RMB 5,000/mt since second half of October.
Chinese domestic rebar and hot roll coil (HRC) prices were on the downtrend since mid-October, though the month of October was usually seen as the peak season for long steel consumption in China, due to cooler weather for outdoor industrial works.
However, the market sentiment remained low for steel consumption in Q4, due to the slowdown of industrial and construction activities as well as crude steel output curb not to exceed the 1 billion mt mark recorded in 2020.
Growing industrial profits during Jan-Sep 2021
Despite the gloomy outlook for steel market, Chinese industrial firms achieved higher profitability during Jan-Sep 2021 period, according to the National Bureau of Statistics (NBS).
Based on the statistics data, the industrial gross profits grew by 44% on-year to RMB 6.34 trillion or $990 billion against the pandemic year of 2020, and up 41.2% compared to the pre-pandemic year of 2019.
However, there was some market uncertainty on whether the profitability growth can continue toward the year-end, in view of the ongoing high raw material prices and power crunch that drove up industrial input costs.