The futures of Dalian Commodity Exchange (DCE) closed for the week-long Golden week holidays, though market participants held mixed view over the iron ore demand.
Part of the market bearish sentiment was linked to poor economic data from China, as the country’s manufacturing PMI ratings fell to contractionary levels.
In meantime, the China’s recent power crunch seemed to affect more industrial activities rather than the strict pandemic measures.
Mixed readings for China’s PMIs
The country’s official manufacturing PMI registered a sub-50 level or 49.6 readings in September, indicating a contraction in economic activity, while the private PMI reading showed otherwise.
As China’s Caixin/Markit Manufacturing PMI held steady at the 50 marks in September, beating market estimate of 49.5, and better than 49.2 rating recorded a month before.
Nevertheless, the Chinese industrial output faced huge pressure from the power rationing policy, which restricted factories’ operating hours, and resulted in periodic blackout among Northeastern provinces.
Meanwhile, there was also industrial disruption in southeastern China, due to the ongoing small scale coronavirus outbreaks.
Less PBF and more SP10 from Rio Tinto
Rio Tinto’s PBF supplies might tighten further in coming months, due to operating issues of its iron ore mines in Western Australia.
The miner giant might produce more SP10 instead of the PBF, for offers into the spot market, which recorded one seaborne trade of PBF in September, as compared to an average of 11 trades per month during the Jan-Aug 2021 period.
Some trade participants also noticed a drop of quality in recent PBF cargoes with ferrous levels that went below 61.3% recently. Thus, more buyers sought after Newman High Grade fines instead which had the consistency at the 62.3% Fe level.