Iron ore futures rose further on higher steel prices, though market had concerned over steel demand after the Spring festival holiday season.
The futures of Dalian Commodity Exchange (DCE) for January delivery then increased by 4.26% day-on-day or up RMB 30 to RMB 735/mt, during the day trading session on Wednesday.
The rebar futures also rose by 3.02% day-on-day or up RMB 138 to RMB 4,713/mt, during the day trading session.
Lower steel exports sales due to market uncertainty
The uptick was despite the lower Chinese steel exports sale recorded in mid-January, as market activities slowed down ahead of the Lunar New Year holidays.
According to Mysteel, the export prices of SS400 4.75mm hot-rolled coil (HRC) went down by $2/mt on-week to RMB 755/mt as of Jan 17, while SPCC 1.0mm cold-rolled coil (CRC) was assessed at RMB 852/mt, down $2/mt weekly.
The lower sales may have to do with market uncertainty that the Chinese economy faced in Q1 2022, with lower investment growth in the property sector and fears of further outbreaks of the pandemic, according to the country’s National Development and Reform Commission (NDRC).
However, there was some market speculations that the Beijing policymakers might introduce some industrial policies on infrastructure projects to boost demand in the near term.
China-based mills cease operation to prepare for holidays season
According to Mysteel, many electric-arc-furnace (EAF) producers had already suspended their operations to prepare for the upcoming Spring festival holidays.
The shutdown also allowed the EAF mills to save costs from any further margin losses, and they are unlikely to resume operations after Feb 6 or till the end of the Lunar New Year holidays.
So far, Mysteel estimated around 50 steelmakers to undergo for the scheduled maintenance period ahead of the holidays season, which provided some price upticks for steel products due to limited output.