Iron ore futures opened high, but only to face a selloff at the start of afternoon session and closed lower by day-end.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) dropped slightly by 0.48% day-on-day or RMB 5 to RMB 1,046/mt on Friday.
The steel rebar contract on the Shanghai Futures Exchange also dipped by 0.60% or RMB 26 day on-day to RMB 4,294/mt.
High steel stockpiles for mid-January
The decline in futures market reflected market concerns over Chinese steel demand, with slower rate of consumption that resulted in high steel stockpiles.
For instance, the Chinese steel stockpiles continued to swell on lower steel consumption for products like rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate.
Mills’ finished steel stocks reached 5.95 million mt during the Jan 14-20 period, up 3.3% on-week, based on Mysteel’s data.
Similarly, Chinese traders’ steel stocks also rose by 1.1 million mt week-on-week to 15.9 million mt as of Jan 21, according to Mysteel.
Japanese steel exports drop by 4.8% in 2020
Japan exported a total of 31.26 million mt steel products for the full year of 2020, down 4.8% year-on-year, based on the preliminary data done by the country’s Ministry of Finance.
Thus, the Japanese steel exports will have been in decline for the fourth consecutive year according to the preliminary data, with export volumes failing to reach the 40 million mt mark.
The declining volume was attributed to the bearish steel demand caused by Covid-19 outbreak that led to lower steel consumption globally.