Iron ore futures rose on bullish market sentiment over post-Lunar New Year demand, despite a slowdown of construction activities, due to the week-long holidays season.
The futures of Dalian Commodity Exchange (DCE) for May delivery then hiked by 3.40% day-on-day or up RMB 25.50 to RMB 776/mt, during the morning trading session on Wednesday.
The rebar futures also inched up slightly by 0.36% or up RMB 17 to RMB 4,694/mt, during the morning trading session.
China’s construction projects drop down 73% during holidays season
The market speculation led to some mismatch between the paper and physical market, as Mysteel estimated around 73% of the 14,890 property and infrastructure projects across China were halted, due to the holidays season.
The stoppage of construction projects across Northern China were even higher, estimated at over 90%, then followed by the suspension of construction projects at around 80% at around central and southwest China.
So far, the country’s construction projects accounted over 60% of the steel consumption and many mills had completed their restocking activities of iron ore inventory ahead of the long-holiday period.
Market speculation of iron ore prices reaching $150/mt
Some trade sources expected the raw materials procurement to start later at around mid-February period as most mills were believed to hold sufficient stocks, amid steel production curbs in Hebei province, or the largest steelmaking hub of the country.
However, there were market views that by then, the iron ore prices might break reach $150/mt later in the month, according to Platts.
As some trade sources expected the Beijing policymakers to roll out some stimulus package to bolster the economy, though the state authority remained silent on mining and crude steel production guideline for the year, but that might be clearer after the holidays.