Iron ore futures suffered a hiccup from previous rally, due to market uncertainty over steel demand and lower imports data.
The futures of Dalian Commodity Exchange (DCE) for January delivery then dropped by 2.30% day-on-day or down RMB 17 to RMB 722/mt, during the day trading session on Friday.
The rebar futures also dipped slightly by 0.02% day-on-day or down RMB 1 to RMB 4,664/mt, during the day trading session.
Lower Chinese import of iron ore due to slowing demand
China iron ore imports fell by 4.3% on-year to 1.12 billion mt in 2021, according to the country’s General Administration of customs.
The data showed that there was a demand slowdown in December, with iron ore imports dropping 18% as compared to previous month, indicating slowing construction activities and subdued downstream demand for industrial needs.
However, some trade participants still expected some upticks in restocking demand from lower Chinese mills’ steel stocks, as Mysteel recorded the total steel mills inventories to reach 4.17 million mt as of Jan 12, down 2.2% weekly.
Further decline of steel imports predicted for 2022
Market outlook was also dampened by stable steel demand for 2022, as China’s steel production was unlikely to exceed more than 1 billion mt, due to the oversupplied domestic market.
Hence, a Chinese government-backed consultancy expected the country’s iron ore imports to decline further to around 1.08 billion mt in 2022, in view of rising usage of steel scrap and falling steel production.
Moreover, Platts predicted more price corrections for Chinese domestic steel prices by 10-15% in 2022 like for HRC products, due to demand uncertainty and softening property market.