Iron ore futures dipped at the close, despite a strong comeback from morning session slump, amid bearish market sentiments over low steel demand and margins.
The futures of Dalian Commodity Exchange (DCE) for January delivery then inched down by 0.97% day-on-day or down RMB 5.50 to RMB 561/mt, during the day trading session on Tuesday.
The rebar futures followed the dip and fell slightly by 0.68% day-on-day or down RMB 29 to RMB 4,257/mt, during the day trading session.
Falling rebar margins and production
The decline of rebar futures reflected bearish market sentiments over rebar demand due to low construction activity during off-peak season.
Hence, some mills had scheduled maintenance period that resulted a weekly dip of 0.7% to 2.88 million mt rebar output over the Oct 28-Nov 3 period.
As mill margins for domestic rebar had dropped considerably with Platts’ estimates of profit margins at $22.40/mt, down $207.12/mt from early October.
Thus, Mysteel expected further prices corrections for rebar over Nov 8-12 period, amid mills’ maintenance period and colder weather in Northern China that slowed down construction activities.
Rising iron ore shipment from Australia and Brazil
The supply of iron ore shipments had also improved among suppliers, thus putting pressure on iron ore prices to decline further.
According to Mysteel, the total iron ore shipment from Australia and Brazil reached a one-month high of 24.5 million mt during the Nov 1-7 period, up 2.2% on-week.
Apparently, the Brazilian exports had grew considerably to 6.3 million mt, up 11.3% on-week, as miners pushed to meet their annual shipping guidance, while Australian cargoes dipped slightly by 109,000 mt on-week to 18.2 million mt.