Iron ore futures opened high at the starting session, but the upward momentum then reversed into losses at the close.
The futures of Dalian Commodity Exchange (DCE) for January delivery then inched down by 0.27% day-on-day or down RMB 2 to RMB 732.50/mt, during the morning trading session on Friday.
The rebar future however, rose by 1.31% day-on-day or up RMB 73 to RMB 5,640/mt, during the day trading session.
Lower steel stocks from better consumption
Despite the declining paper market, some trade participants expected some price upticks in near term, due to better steel consumption that resulted in lower steel stocks.
According to mills’ steel stocks, the total inventory reached 5.95 million mt as of Sep 8, down 4.1% on-week, for steel products consisting of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plates.
Similarly, the Chinese retail steel stocks also went down by 1.8% on-week to 22.6 million mt, during Sep 3-9 period, due to better steel consumption.
More corrections as iron ore shipments improved
Trade participants expected more supplies for October till the year-end as major and junior miners tried to increase shipments, during the second half of the year to fulfill their annual guidance and seize profits.
Thus, some market participants expected further price correction for Brazilian high grade fines as their shipments tend to rise in the last quarter.
However, the high coke prices might offset some of the fall in high grade prices, due to lower tolerance towards silica and alumina impurities.
Meanwhile, the prices for low grade fines might stabilize, as many of them were under steep discount already, and more mills might adopt the low and high grade blending to cut costs.