Iron ore futures extended its bearish run for the third consecutive trading day, due to limited trading activities.
The futures of Dalian Commodity Exchange (DCE) for May delivery then fell by 1.10% day-on-day or down RMB 8 to RMB 720/mt, during the day trading session on Wednesday.
The rebar futures, however, went up by 1.85% or up RMB 88 to RMB 4,832/mt, during the day trading session.
Limited trading activities in awaiting market clarity
Trading activities were subdued as trade participants are waiting for clearer market direction before the upcoming meeting with market regulators on Thursday.
The issues discussion will likely cover on the price discovery mechanism being used in the industry currently and whether some players had misused this information to manipulate prices for abnormal gains.
Some traders welcomed the move as it provided more transparency to the market, while mills were more concerned on lifting of the output curb after the Winter Olympics and perhaps some emission restrictions to be implemented for the major Chinese political meeting in March.
Falling Chinese excavator sales to signal lower steel demand
China’s domestic excavator sales dropped by 48.3% year-on-year to 8,282 units in January 2022, or nearly halved from previous year volume, according to China Construction Machinery Association.
The excavator sales figure had been often used as indicator of construction activity, and so far, the falling excavator sales seemed to tie up with the poor property home sales which is expected to dip from the Q1 to Q2 period.
These bearish sentiments will lead to lower steel demand, as China’s property sector accounted around 30% of the country’s total steel consumption, then followed by infrastructure sector that covered around 20%.