Iron ore futures reversed into losses, due to lower steel prices and market uncertainty over the Two Sessions meeting in Beijing.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then slid up by 3.26% day-on-day or RMB 38 to RMB 1,127.50/mt on Friday.
The steel rebar contract on the Shanghai Futures Exchange also inched down by 3.14% or RMB 152 day-on-day to RMB 4,696/mt.
Flat 6% GDP growth for China
China has set a target GDP growth of over 6% for 2021, during the annual Two Sessions meeting in Beijing.
Previously, the country registered 2.3% GDP growth in the pandemic-hit year of 2020, becoming the only major world economy to reach positive GDP growth.
In the pursuit of higher GDP growth, Platts expect China to step up with its carbon emission reduction in 2021 as well, which might affect the steel-intensive infrastructure sector going forward.
Hence, Platts predicted further steel production cuts during the second half of 2021, then the reduction of steel export rebates to discourage steel exports, followed by more scrap utilization and greater consolidation of steel industry to achieve the long-term plan of carbon neutrality by 2060.
High portside stocks to ease prices
Iron ore prices might come under further pressure from high portside stocks as Mysteel recorded a total of 127.89 million mt as of Mar 5, up 1.44 million mt week-on-week.
In the meantime, the total rebar inventory also remained high at 18.26 million mt for the week ended on Mar 4, up 5.14% week-on-week, as rebar production increased in anticipation of the construction season in March.
However, the high stockpiles resulted in lower billet prices, as the Tangshan billet prices lost over RMB 100 on-day to RMB 4,300/mt on Friday, as market participants waited for market clarification on steel-related policies from the Two Sessions meeting.