Iron ore futures rose for second consecutive trading day of the week, due to better restocking demand among steel mills.
The futures of Dalian Commodity Exchange (DCE) for January delivery then rose by 2.44% day-on-day or up RMB 14.50 to RMB 609.50/mt, during the day trading session on Tuesday.
The rebar futures also followed the rally and hiked up slightly by 0.85% day-on-day or up RMB 35 to RMB 4,163/mt, during the day trading session.
Short term rebound on better margins
Some market participants viewed the rebound as short term, due to better mills’ profitability after the recent corrections, while long term steel demand recovery was still believed to be curtailed by the ongoing production cuts.
Meanwhile, some trade participants believed that the market had bottomed up, as there were some signs of improvement in the property market with the easing of bank credits to financially sound property developers.
In the meantime, the iron ore prices might draw some supports from slower iron ore shipments from Australia and Brazil, as the total volume of iron ore shipments dropped by 1.9% on-week to 25.3 million mt during Nov 22-28 period.
Growing China’s factory activities amid Omicron scares
China’s official manufacturing Purchasing Manager’s Index (PMI) held up at 50.1 reading in November, up from 49.2 reading in October, indicating the economy was expanding in factory activities.
The growth was linked to falling raw materials prices and recovery of power shortfalls from better rationing of electricity to boost manufacturing activities.
Despite the good economic indicator, some trade participants urged cautions over the new covid variant, Omicron on its impact on market demand and supplies.
As major European economic powers, Germany, UK and Italy stepped up their borders controls to contain the new strain of virus, which might lead more countries to follow their examples.