Iron ore futures plunged further on higher port inventory, despite some improvement in daily consumption of imported iron ores.
The futures of Dalian Commodity Exchange (DCE) for January delivery then dropped by 3.08% day-on-day or down RMB 19 to RMB 597/mt, during the day trading session on Friday.
The rebar futures however, hiked up by 2.05% day-on-day or up RMB 88 to RMB 4,384/mt, during the day trading session.
High port inventory to weigh down on prices
Some trade participants expected further price correction due to higher port inventory, which reached at 154.57 million mt as of Dec 3, up 2.05 million mt on-week, based on Mysteel’s survey of 45 Chinese ports.
However, there might be some price support from better daily consumption rates, as the daily consumption of imported iron ore sintering fines went up by 7% fortnightly to 447,200 mt per day over the Nov 18- Dec 1 period.
The higher consumption rates were linked to the restart of sintering operations among mills in Tangshan, after state authority relaxed production restriction recently.
Declining steel stocks due to slow output and better consumption
Chinese steel mills’ stocks reached 5.1 million mt during Nov 25 – Dec 1 period, down 8.7% on-week, according to Mysteel’s survey of 184 China-based steel mills.
The declining steel inventory indicated better steel consumption in the market, while production had been reduced by some scheduled maintenance works of steel mills.
Some trade sources cited that the latest drawdown of inventory had accelerated at a faster pace as compared to 2.4% drop recorded last week, due to improvement in steel demand.