Iron ore futures inched down into losses as market optimism waned over slow steel demand in the physical market.
The futures of Dalian Commodity Exchange (DCE) for January delivery then inched down by 0.61% day-on-day or down RMB 4 to RMB 650.50/mt, during the day trading session on Tuesday.
The rebar futures, however, went up slightly by 0.83% day-on-day or up RMB 36 to RMB 4,382/mt, during the day trading session.
Slowing steel output and declining exports
Steel demand seemed to have cooled off toward year-end, as some end-users were heard to finish their steel procurement for the year by November.
This resulted in limited demand for Chinese steel exports in December, as trade participants prepared for the Christmas and New Year holiday seasons.
In the meantime, the daily crude steel production went down over Dec 1-10 period, as Mysteel recorded daily average output rate at 2.36 million mt, the lowest level since Jan 2018, due to winter demand lull.
Falling iron ore shipments due to bad weather
Despite the slowing steel demand, the iron ore market might receive some supports from the dwindling iron ore shipments from Australian and Brazilian suppliers.
According to Mysteel, iron ore shipments dropped by 19.3% on-week or 5.4 million mt to 22.5 million mt, during Dec 6-12 period due to bad weather that affected port operations.
The falling shipments were in line with declining iron ore exports from Port Hedland, as the total iron ore shipments to China fell by 6.7% on-month or 2.6 million mt to 36.5 million mt in November, based on data from Pilbara Ports Authority (PPA).