Iron ore futures rebounded from losses last week, amid market optimism over better monetary and fiscal policy pledged by Beijing policymakers.
The futures of Dalian Commodity Exchange (DCE) for January delivery then rose by 5.03% day-on-day or up RMB 32 to RMB 668.50/mt, during the day trading session on Monday.
The rebar futures also went up by 2.51% day-on-day or up RMB 108 to RMB 4,415/mt, during the day trading session.
Market optimism over pro-business policies in 2022
Chinese state authority is expected to introduce more flexible policy in the country’s property market, after some market sources suggested that the debt-ridden property developer, Evergrande to slide into defaults from its loan payments.
Thus, Beijing policymakers were slated to implement new tax and fee cuts and front-load infrastructure investment for the new year of 2022, improving market confidence and mitigate financial risks.
However, market participants expected less changes on the supply side of iron ore market, with stable output from domestic mines and constant shipment flows from mainstream miners.
Discrepancy between paper rally and slow physical market
Despite the paper rally, Mysteel expected physical steel prices to remain rangebound over the Dec 13-17 period, such as rebar and wire rod.
As it was heard that buyers were waiting for clearer market directions, while steel demand is expected to remain firm in southern China with minimal impact from weather-related factors.
In the meantime, some trade participants anticipated some sintering curbs to be introduced to improve air quality before the upcoming Winter Olympic next year.