Iron ore futures opened low and closed higher at the afternoon session, amid market concerns over cyclone development in Australia.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) then rose slightly by 0.90% day-on-day or RMB 9.50 to RMB 1,061/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange also rose by 1.72% or RMB 74 day on-day to RMB 4,369/mt.
Vessels clearing of Port Hedland
Australia’s Bureau of Meteorology (BOM) had anticipated a tropical low to develop into category 1 or 2 cyclone making landfall to Pilbara coast by Friday afternoon.
Since then, all large vessels had been cleared from Port Hedland in anticipation of the Cyclone Lucas’ arrival, as the strong winds and heavy rains are slated to affect shipping activities.
In view of the cyclone season in Australia, some potential buyers tried to snap up cargoes before potential supply disruption hit in the market.
Lower domestic demand during winter period
Chinese domestic steel demand is expected to decline in near term, due to cold winter conditions in China and rising coronavirus cases in Hebei.
According to China Iron & Steel Association (CISA), there was lesser construction activities during the cold winter season, which lowered the demand for construction steels and resulted in rising steel stockpiles held by mills and traders.
As such, the price of HRB400 20mm dia rebar had dropped for the second consecutive trading days by RMB 4,340/mt as of Jan 20, down RMB 10/mt day-on-day, according to Mysteel.
Nevertheless, CISA expected the Chinese steel demand to remain stable for 2021, due to support from government fiscal stimulus policies that aim to lift the economy.