Iron ore futures opened high on the morning session, only to flatten later at the afternoon session as steel prices dropped.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then moved up slightly by 0.26% day-on-day or RMB 3 to RMB 1,143.50/mt on Monday.
The steel rebar contract on the Shanghai Futures Exchange followed similar trajectory and inched up by 0.72% or RMB 34 day-on-day to RMB 4,752/mt.
Steel prices to soften for the week
Chinese rebar prices are expected to lower over the March 8-12 period, due to cautious trading amid Two Sessions meeting, according to Mysteel.
The steel consultancy firm noted that the lower spot sales of rebar and wire rod were being traded than expected due to the recent high steel price upticks, while market participants waited for clearer direction on steel-related policy discussed in the Two Sessions meeting.
Some participants were concerned that the country’s focus on cutting carbon emission may reduce steel output in 2021, as compared to the finalized national crude steel output at 1.065 billion mt recorded in 2020, by China’s National Bureau of Statistic.
Meanwhile, the Tangshan billet prices also slipped by RMB 20 on-day to RMB 4,390/mt on Monday, after an increase of RMB 110 over the weekend.
Output curb dampens further spot purchases
Iron ore spot purchases had softened due to the trucking and production curbs, during the Two Sessions meeting.
Some trade participants were also concerned about the lack of details on steel-related and domestic iron ore output during the Two Sessions and expected limited growth in domestic supply due to stricter environmental and safety regulations.
Thus, most trade participants expected the production and truck transportation restriction as temporary and will ease as the Two Sessions meeting ended.
However, some trade sources believed that the Beijing policymakers may push for more steel imports and lesser exports to curb carbon emission from the steelmaking processes.