Iron ore futures rebounded from recent losses, which previously brought the index to a one year low this week, due to the off-peak steel demand season.
The futures of Dalian Commodity Exchange (DCE) for January delivery then rose by 6.84% day-on-day or up RMB 36.50 to RMB 570.50/mt, during the day trading session on Thursday.
The rebar futures also rose by 7.42% day-on-day or up RMB 307 to RMB 4,443/mt, during the day trading session.
Prices bottoming out with easier issuance of bonds for property sector
The futures uptick may reflect some market views that the prices may have bottomed up after a series of correction, while media had been circulating that China may make it easier for financial-healthy property firms to sell debts.
However, the overall market sentiment remained bearish for steel demand with declining profits, as Chinese blast-furnace steel mills’ profitability dropped further in October.
As Mysteel assessed that the average margin on hot-rolled coil (HRC) at RMB 402/mt in October, down RMB 417/mt on-month, due to falling steel prices and increased input costs.
Low excavator sales amid slower property steel demand
China’s property woes were not out of the woods, despite the debt-ridden developer, Evergrande managed to avoid loan default time and time again, after paying overdue interest rates this week.
As the country’s excavator sales, a good indicator for construction activity, had dropped by 47% on-year to 12,608 units in October, and down 38% monthly based on China Construction Machinery Association data.
Thus, many trade participants expected steel demand for construction activity to fall further during the November-December period, though the market may recover some lost ground by Q1 2022, due to faster issuance of bonds during Q4 2021.