Iron ore futures extended losses till the end of the week, as market expected more intervention from regulators to stabilize prices.
The futures of Dalian Commodity Exchange (DCE) for May delivery then fell by 1.37% day-on-day or down RMB 9.50 to RMB 685/mt, during the day trading session on Friday.
The rebar futures however went down slightly 0.74% or down RMB 35 to RMB 4,779/mt, during the day trading session.
More state interventions to stabilize prices
Most market participants took to the sideline, in waiting for directives from Chinese trade regulators as they asked traders yesterday to sell excessive stocks to maintain a good level of inventory.
Hence, most of trade participants expected more price correction from the selloffs of stocks, though the iron ore port inventory reached another record-high for the week ended on 18 Feb 2022.
As Mysteel recorded total iron ore inventories at 160.34 million mt this week, up 1.44 million mt week-on-week, and beating previous record high level of 157 million mt recorded at the end of December last year.
Port congestion to extend iron ore delivery time
China’s port congestion is way from over, delaying the time for iron ore arrival by taking around 7-10 days due to stringent pandemic checks and quarantine requirement for vessels.
Moreover, the rising Omicron cases in Hong Kong might exacerbate the problem, as state authority might impose stricter quarantine requirements for vessels, while there was reduced manpower at port for unloading and logistic operations.
Hence, some market participants suspected that the shipping delays might support iron ore prices, though Chinese authority is trying to cool iron ore pricings in asking traders to stop hoarding and drawdown inventories.