Iron ore futures dropped at the start of second trading week of the new year, as restocking activities slowed down, while rising omicron cases caused panic in the market.
The futures of Dalian Commodity Exchange (DCE) for January delivery then fell by 2.03% day-on-day or down RMB 14.50 to RMB 699.50/mt, during the day trading session on Monday.
The rebar futures, however, went up slightly by 0.09% day-on-day or up RMB 4 to RMB 4,492/mt, during the day trading session.
Market concerns over possible lockdowns in Tianjin, China
There was growing market concerns over more cities’ lockdowns in China that reduced the steel demand, as the Beijing policymakers ordered mass covid tests for 14 million people in Tianjin after some cases of Omicron were found, according to media sources.
Some market skeptics even doubted whether the Winter Olympic will be held in Beijing in early February, as Tianjin is relatively close to the Chinese capital city, which affected market sentiments on steel demand.
Meanwhile, slowing restocking activity had been observed among Chinese mills, as most mills were heard to secure sufficient iron ore inventory ahead of the Lunar New year holidays in early February, though there might be some small pockets of purchases for stocks replenishment.
Steel prices to face headwind during the week
In view of these negative market sentiment, Mysteel expected the prices of rebar and wire rod to soften during Jan 10-14 period.
As the consultancy firm noted subdued demand from end-users ahead of the Lunar New Year holidays during Jan 31- Feb 6 period, as winter restocking activities seemed to slow down.
Some buyers were also heard to refrain from procurement but instead waiting for further price corrections to occur before snapping up cargoes again.