Iron ore futures rallied from previous trading day slump, but slipped at the close, amid bearish market sentiment on steel demand.
The futures of Dalian Commodity Exchange (DCE) for January delivery then fell by 1.01% day-on-day or down RMB 5.50 to RMB 538.50/mt, during the day trading session on Wednesday.
The rebar futures however, gained by 0.55% day-on-day or up RMB 23 to RMB 4,216/mt, during the day trading session.
Steel output expected to rebound in early 2022
Despite the current low steel demand, some trade participants remained optimistic that Chinese steel production may rebound in early 2022, after the mandatory output cuts were scheduled to be completed by the end of December.
Meanwhile, some trade participants found some signs of better steel consumptions as China’s daily crude steel output averaged 2.343 million mt/day during Nov 1-10 period, up 1.5% from October, but down nearly 20% on-year, according to China Iron & Steel Association.
However, most of steel mills had lowered their blast furnace utilization rates during winter season, as major steelmaking hubs of Tangshan and Handan cut their utilization rates around 65% and 70%, as of mid-November.
Strong Chinese shipbuilding to support steel growth
China’s new vessels orders reached a total of 61.5 million deadweight ton (DWT) during Jan-Oct period, with a record high yearly jump of 210%, based on data from China Association of the National Shipbuilding Industry (CANSI).
The shipping growth may lend some support to the country’s ailing steel demand after the recent shock on Chinese property sector being weighed down by huge debts and low home sales.
According to CANSI, the newbuild volumes had doubled nearly that of second placed South Korea at 38.62 million DWT, and way ahead of Japan’s newbuild volume at 11.38 million DWT during the ten-month period.