Iron ore futures traded high on the morning session but faced some correction in afternoon session in a volatile trading market.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) dropped slightly by 0.71% day-on-day or RMB 7.50 to RMB 1,047/mt on Monday.
The steel rebar contract on the Shanghai Futures Exchange also dipped slightly by 0.25% or RMB 11 day on-day to RMB 4,321/mt.
Lesser construction operations as workers return home
The prices of Chinese long steel products are expected to ease further over the Jan 25-29 period, due to less construction activities as workers returned home to celebrate upcoming Lunar New Year holidays.
According to Mysteel’s assessment, the price of HRB400 20mm dia rebar slid by RMB 7/mt on-week to RMB 4,350/mt as of Jan 22.
Further price correction is expected as some domestic steel traders were heard to have completed their restocking of finished steels, ahead of the Lunar New Year celebration during the Feb 11-17.
Lower blast furnace capacity utilization rates
China’s blast furnace capacity utilization rates had dropped for the fifth consecutive week to 82.22%, according to Mysteel’s survey over 163 blast furnaces across China.
The decline in utilization rates were partially attributed to the mills’ maintenances as some of Hebei-based mills were heard to bring forward their scheduled maintenances period in view of the rising coronavirus cases that slowed the truck delivery of raw materials for steelmaking.
Meanwhile, the steel margins became thinner and, in some cases, turned negative, which resulted some northern China-based mills to save costs by switching to discounted ores like the Super Special fines and Atlas fine as blast furnaces’ feedstocks.