Iron ore futures inched up amid mixed market outlook, in view of slowing demand approaching holidays and expectation of more production curbs during Winter Olympics.
The futures of Dalian Commodity Exchange (DCE) for January delivery then increased by 1.30% day-on-day or up RMB 9.50 to RMB 742/mt, during the day trading session on Thursday.
The rebar futures also rose slightly by 0.32% day-on-day or up RMB 15 to RMB 4,713/mt, during the day trading session.
Monetary easing to spur growth
The recent paper rally reflected market optimism over Beijing policymakers’ easing of monetary efforts that lowered the costs for credit lending.
As such, the one-year loan prime rate (LPR) was lowered by 10 basis points to 3.70% from 3.80%, while the five-year LPR was reduced by 5 basis points to 4.60% from 4.65%.
The loan rate reduction marked the first since April 2020, as then the country’s tried to stimulate its economy at the early stages of the covid pandemic, while the latest monetary easing aimed at boosting its economy during the Spring festival season.
According to media sources, the Chinese government might introduce more monetary easing measures during the first half of year to further stabilize its economy after the poor performance showed in its property market.
More production curbs during Lunar New Year holidays
According to Mysteel, Tangshan-based mills had scheduled plans for maintenance during the Spring festival holidays.
It was estimated that the steelmaking hub’s capacity utilization rate for blast furnaces will be lowered to 63% from 78% when 16 more furnaces undergo maintenance period from January 30 to February 20.
Besides the scheduled maintenance period, some trade participants also expected some production curbs during the Winter Olympics period of Feb 4-20, as part of the Chinese authority effort to improve air quality.