Iron ore futures extended gains on market optimism over steel demand with better money supply to fund construction activities.
The futures of Dalian Commodity Exchange (DCE) for January delivery then increased by 2.46% day-on-day or up RMB 15.50 to RMB 646/mt, during the day trading session on Wednesday.
The rebar futures, however, went down by 2% day-on-day or down RMB 89 to RMB 4,350/mt, during the day trading session.
Lower construction steel demand during December
Market outlook was buoyed by looser monetary policy from Chinese banks to support small-medium businesses that lifted steel demand.
Despite the positive outlook, Mysteel expected construction steel demand to shrink during the month of December, due to lesser building projects.
After surveying 563 trade participants, Mysteel concluded that the most end-users are willing to procure construction steel products on need-basis, due to the market uncertainty over infrastructure and property sectors, despite better fundings from banks.
Lower daily crude steel output in late November
Chinese mills average daily output reached 1.72 million mt per day during Nov 21-30 period, down by 2.6% or 45,900 mt per day from previous ten-day period, according to China Iron & Steel Association (CISA).
The latest daily average production rate was at a 4.5 year low, due to the output restrictions enforced upon Chinese steelmakers, especially for those mills based in northern China.
Some market participants expected a higher daily crude steel output during December, due to the easing of production restrictions being lifted, though it might be subjected to changes from stricter sintering curbs before the Winter Olympics.