Iron ore futures rallied at the start of the week, due to market optimism on mills’ ramping up steel production in December.
The futures of Dalian Commodity Exchange (DCE) for January delivery then rose by 4.77% day-on-day or up RMB 28 to RMB 614.50/mt, during the day trading session on Monday.
The rebar futures, however dropped slightly by 0.32% day-on-day or down RMB 14 to RMB 4,414/mt, during the day trading session.
Cautions ahead for rising output in December
Despite the market optimisms, some market participants urged for cautions as cold winter descended on North China that limited demand.
Thus, Mysteel expected rangebound prices movement for rebar and wire rod during Nov 29 – Dec 3 period, in view of possible resurgence of pandemic during the winter flu season and introduction of additional sintering curbs to improve air quality.
However, there might be some supports from banks with the easing of financial loans to healthy property developers that boosted market confidence to the property sector as well as stimulus packages to foster sales of electric vehicles and home appliances that increased steel demand.
Omicron variant to affect iron ore market
Some market participants were concerned that the new coronavirus variant may affect the supplies and demand of iron ores.
As iron ore producing countries like Australia or Brazil might introduce tougher measures to contain the spread of new virus and affected iron ore shipments to China.
However, some trade participants viewed the market concerns as short term, though it will continue to add to the market volatility over raw material supply and demand.