Iron ore futures dipped in the morning session, due to market concerns over falling steel output that affected sentiments.
The futures of Dalian Commodity Exchange (DCE) for January delivery then fell by 3.37% day-on-day or down RMB 23.50 to RMB 673.50/mt, during the day trading session on Tuesday.
The rebar futures also went down by 1.41% day-on-day or down RMB 62 to RMB 4,324/mt, during the day trading session.
Falling rebar productions at three-month low
Chinese rebar production had dropped to almost three-month low since mid-September to reach 2.65 million mt during Dec 16-22 period, down 3.1% on-week.
According to Mysteel, the low rebar output had persisted for the third consecutive weeks due to stricter output curbs imposed in steelmaking hubs of Handan and Tangshan.
Despite the falling rebar output, some trade participants were optimistic regarding steel output restrictions, as it was heard that some mills had already fulfilled their production cut quota for the year and might ramp up production due to better steel margins.
Lockdown concerns after strictest measures imposed in Xian
Some trade participants were concerned over the lockdown in Xian, which media sources dubbed the ‘strictest’ control measures to contain the virus spread.
As China continued to pursue zero-tolerance policy for the Covid pandemic, thus market participants were worried these social restriction measures might extend to other Chinese cities.
Meanwhile, the city of Xian is considered the most industrialized city in northwest China, home to major aviation industry and the city lockdown is slated to affect steel consumption.