Iron ore futures jumped on better industrial steel consumption and loosening of bank credits for the embattled Chinese property sector.
The futures of Dalian Commodity Exchange (DCE) for January delivery then rose by 6.18% day-on-day or up RMB 32.50 to RMB 558/mt, during the day trading session on Monday.
The rebar futures also inched up by 2.28% day-on-day or up RMB 96 to RMB 4,300/mt, during the day trading session.
Market optimism on higher demand for industrial steels
The future upticks were linked to better demand of industrial metals like rebar, wire rod and HRCs as Mysteel data indicated a 4.2% weekly rise of consumption as of Nov 19 from early November.
Thus, prices of rebar and wire rod is expected to rebound over the Nov 22-26 period, accelerated by easing of bank loans for Chinese property sector that attracted better demand from both end-users and traders.
The better demand resulted in higher spot prices for rebar and HRC with gains of RMB 400 and RMB 200 respectively, which improved steel margins as mills were heard to be operating in negative or near break-even margins recently due to falling steel prices.
Growing steel demand from ex-China market
India’s Tata Steel expected higher steel prices and more demand to come from other markets outside of China.
The largest Indian steelmakers predicted the long-term average of HRC to reach over $600/mt, in comparison to the average price of HRC around $400-$450/mt for the past 7-8 years.
As steel demand is estimated to grow faster outside of China, with the Western nations, notably the US to invest heavily in the infrastructures.
In the meantime, China’s steel exports were expected to decrease, probably under 60 million mt per year, in view of the country’s net zero carbon emission goals.