Iron ore futures closed lower at the day session, despite the recent rebound seen yesterday, following the bearish market sentiments.
The futures of Dalian Commodity Exchange (DCE) for January delivery then slid by 1.62% day-on-day or down RMB 9 to RMB 546.50/mt, during the day trading session on Friday.
The rebar futures also fell by 2.30% day-on-day or down RMB 100 to RMB 4,249/mt, during the day trading session.
Shaky Chinese property market restricts steel construction demand
Market participants were still skeptical over Chinese property sector, despite the cash-strapped property developer, Evergrande was able to pay overdue interest just before the deadline this week.
According to trade sources, most of the property developers were only interested in completing existing property projects and were in not hurry to launch new projects, given the low market confidence.
However, the repayment of the interests did improve some market sentiment, providing some hopes that Chinese mills might ramp up production eventually. Thus, the Commonwealth Bank of Australia remained optimistic and predicted $100/mt for iron ore prices during Q4 2021.
Low retail steel stocks during early November
China retails steel stockpiles fell for the fifth consecutive week to reach 17.3 million mt during Nov 5-11, down 4.2% on-week, according to Mysteel.
Normally, the low steel stockpiles indicated faster consumption rates from the market, however the recent slump was due to mills’ voluntarily output cut in view of low margins, while some mills chose to go for maintenance during this off-peak demand period.
As such, the daily crude steel output went down to a 20-month low of 2.48 million mt/day, down 92,700 mt/d or 3.6%as compared to average daily output in late October.