Iron ore futures recovered from previous losses amid market optimism over post-Lunar New Year steel demand for infrastructure sector.
The futures of Dalian Commodity Exchange (DCE) for January delivery then increased by 1.39% day-on-day or up RMB 10.50 to RMB 766.50/mt, during the day trading session on Tuesday.
The rebar futures also inched up by 0.21% day-on-day or up RMB 10 to RMB 4,722/mt, during the day trading session.
Lower rebar production to support price upticks
China’s rebar production had fallen by 7.3% weekly to 2.64 million mt during the Jan 13-19 period, according to the Mysteel.
The latest output rate was considered the lowest for almost four months period, after production gained for three consecutive weeks.
The lower production then pushed rebar prices higher around the RMB 4,800/mt mark, despite a slowdown in market activities in view of Spring festival holidays.
As many electric-arc-furnace (EAF) mills and re-rollers had begun their maintenance period ahead of the Lunar New Year holidays till around early to mid-February.
Iron ore shipments drop to two-month low
Iron ore exports from Australia and Brazil had also dipped to two-month low, which lent some support to price movement, due to the wet weather.
According to Mysteel, the total iron ore exports from both countries reached 21.6 million mt over the Jan 17-23 period, down 7.9% weekly, due to reduced productions among the miners in view of heavy rains and flood.
There were also some concerns that the surging Omicron cases may result in more stringent measures in port operations that disrupted logistic and caused delays to shipments.