Iron ore futures rebounded despite slow steel demand as margins improved, which might result in better restocking activities.
The futures of Dalian Commodity Exchange (DCE) for January delivery then jumped by 2.75% day-on-day or up RMB 18 to RMB 673/mt, during the day trading session on Thursday.
The rebar futures also went up by 2.44% day-on-day or up RMB 108 to RMB 4,529/mt, during the day trading session.
Market expectation of more stimulus
Some trade sources expected Beijing policymakers to pump more economic stimulus package in the new year that increase steel demand.
Thus, some market participants expected another round of easing of the property curb in the new year, perhaps with more credit easing to ride out the property curve hampered by debt-ridden developer.
These measures may allow the Chinese property market to avoid a hard landing, but the market was skeptical if steel production will return to 2021 levels, as Beijing policymakers were adamant on reducing carbon emission as part of their long-term goal.
No changes to steel import and export taxes
There was no tax adjustment for steel import and export set for the new year of 2022, which was a common practice by China’s State Taxation Administration (STA) to adjust by mid-December.
Previously, the last adjustment belonged to the rebate removal of the value-added tax for some steel exports since 1 August 2021, which was a follow-up of the cancellation of export tax rebates on 1 May 2021, affecting both CRC and HRC products.
Meanwhile, some trade participants expected state authority to introduce more favorable tax rates to promote steel demand for the new year, in view of the lacklustre property sector in China.