Iron ore futures dipped after three consecutive days of gains, despite a rally in morning session as market participants were concerned over slower steel demand.
The futures of Dalian Commodity Exchange (DCE) for January delivery then dropped by 3.45% day-on-day or down RMB 21.50 to RMB 601/mt, during the day trading session on Thursday.
The rebar futures however, hiked up by 1.32% day-on-day or up RMB 56 to RMB 4,288/mt, during the day trading session.
Scheduled maintenance and ongoing output cuts in December
Some trade participants were concerned over new maintenance works scheduled for December and some output cuts set for eastern and southern China during the month.
However, most participants believed that these activities to be rather small scale and had minimal impact on regional steel output, though an eastern China-based major mill was heard to cut its crude steel output by around 15% or 11,300 mt per day during December.
There was also some market uncertainty over further steel output cuts during the Jan-Feb 2022 period, just ahead of the coming Winter Olympic events, though trade sources expected the output restriction to be gradual and orderly rather than production being suspended entirely.
Low daily crude steel output in November
The bearish market sentiment was also reflected in lower daily production levels in November, as Mysteel recorded the daily crude steel output among Chinese mills at an average of 2.41 million mt per day.
The daily output level was down by 1.5% or 36,900 mt per day during the last days of November, due to a series output restriction among northern China-based mills.
However, some market participants expected higher steel production in December, with the relaxation of some output curbs, while the consumptions of steel products also improved by 2.6% on-week to 9.79 million mt as of Dec 2, according to Mysteel.