Iron ore futures had a choppy trading session, following a late rally at the closing afternoon session to recover the losses at the morning session.
Despite the late charge, the most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), dipped slightly by 0.89% day-on-day or RMB 8.50 to RMB 948/mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange also dropped slightly by 0.22% or RMB 9 day on-day to RMB 4,175/mt.
Hebei’s steel PMI slips to an 8-month low
China’s Hebei steel PMI fell to 46.9 readings in January 2021, the first time in eight months due to stricter movement restriction after a resurgence of coronavirus cases.
The declining PMI contrasted with high PMI recorded at 51.9 readings in December 2020, as the rising Covid cases resulted the country’s top steelmaking province to adopt more checks for trucks transportation and various lockdowns measures to curb the spread.
Meanwhile, market expected steel demand to slowdown for the upcoming Lunar New Year holiday in mid-February, which resulted downward corrections in both the paper and physical markets, since the start of February.
Easing cyclone concerns and end of restocking
Market concerns over cyclone development had eased in the coastal area of Western Australia, as the country’s Bureau of Meteorology (BOM) gave an all-clear alert on Tuesday afternoon, after the tropical low failed to develop into cyclone intensity.
In the meantime, most Chinese mills have completed their restocking needs and they were in no hurry to obtain March cargoes in view of the long Spring festivals holiday in mid-February.
However, the demand for March cargoes were generally positive on good steel demand, while some trade participants expected portside prices to remain higher than their seaborne equivalents in post-Lunar New Year period.