Iron ore futures dipped from recent rally, as market concerns over power conservation policy grew larger, which reduced raw materials demand.
The futures of Dalian Commodity Exchange (DCE) for January delivery then dropped by 2.93% day-on-day or down RMB 20.50 to RMB 678/mt, during the day trading session on Tuesday.
The rebar future however, hiked up by 2.36% day-on-day or up RMB 130 to RMB 5,634/mt, during the day trading session.
Power crunch reduce material demands
China’s industrial sector was facing a power crunch that limited operations of steel works and even resulted in few blackouts in industrial and residential areas across the provinces.
So far, the power saving policies had been extended to more Chinese provinces, that caused industrial outputs to drop in the northeast China and southern China regions, as some factories were only operational for 2-3 days to conserve electricity.
Some trade sources believed the Chinese authority wanted to conserve coal supply from power generations and instead stocked them up for heating purposes during the winter season.
Stable iron ore shipments from Australia and Brazil
The iron ore shipments from Australia and Brazil had stabilized recently at 26.9 million mt over the Sep 20-26, down slightly by 0.07% on-week, according to Mysteel’s data.
The shipment volumes showed growing Brazilian iron ore shipments for the second consecutive weeks, while Australian exports dipped after two weeks of gains.
The rising exports were expected to ease supply tightness in near term as trade participants expected more cargoes delivery in November as compared to October.