Iron ore futures started the week on bullish rally, due to market optimism over the post-Lunar New Year demand.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then jumped by 2.90% day-on-day or RMB 29 to RMB 1,028/mt on Monday.
The steel rebar contract on the Shanghai Futures Exchange also rose by 1.81% or RMB 77 day on-day to RMB 4,335/mt.
Softer steel prices amid holidays celebrations
Despite the market optimism for better post-Lunar New Year demand, Chinese steel prices are expected to soften toward mid-February, in view of thin market activities.
According to Mysteel, the prices of long steel products such as rebar and wire rod are slated to drop over the Feb 8-19 period, due to the Lunar New Year holidays.
Then, Mysteel expected that construction activities will resume later at late Feb or around Feb 26, when most construction workers will return to construction sites and restart operations.
Thus, the price of Q235 4.75mm HRC was assessed at RMB 4,501/mt, down RMB 11/mt on-week as of Feb 5, while the price of HRB400 20mm dia rebar was assessed at Yuan 4,357/mt, up slightly by RMB 1/mt on-day.
Higher Chinese pig iron imports to reduce emission from steel output
China imported a record-high 2.74 million mt of pig iron from Brazil in 2020, as the country tried to save costs and cut emission in steel productions.
This was also part of the Beijing policymakers to use better quality iron ore with pig iron in steelmaking, which is a cleaner process and generates less slag.
Thus, some trade participants expected more Chinese import of Brazilian pig iron in 2021, as the Chinese authority sought to reduce steel production to comply with stricter carbon emission standards.