Iron ore futures went down to correction phrase, after opening high in the morning session only to close lower at the afternoon session.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) dipped slightly by 0.73% or RMB 7.50 to RMB 1,025.50/mt on Monday.
Similarly, the steel rebar contract on the Shanghai Futures Exchange slid by 0.70% or RMB 30 day-on-day to RMB 4,244/mt.
Price corrections for construction steel products
Chinese construction steel prices are expected to slow down for the Dec 28- Jan 1 period, due to higher mills’ production, while lower demand in view of winter season.
According to Mysteel, the Chinese steel production are expected to ramp up during the week, after an output cut for three-week period. Then, the high volume of steel products will ease the limited availability in the market, providing more options to the buyers.
Meanwhile, Chinese construction activities are expected to lower toward year-end, due to the cold harsh winter especially in northern China that lower construction activities.
Thus, many trade participants expected more price corrections for rebar and billet ahead, as the Tangshan billet prices dropped by RMB 50 on-day to RMB 3,770/mt as of Dec 28.
Higher blast furnace utilization among Chinese mills
According to Mysteel, the blast furnace capacity utilization among Chinese mills rose for the second consecutive week to 91.87%, up slightly by 0.19% on-week, during the Dec 18-24 period.
Some trade participants credited the higher utilization to more relax output restriction during this winter season, while some mills managed to complete their scheduled maintenance and resumed operation in year end.
Most mills were heard to be using mid-grade fines like PBF, while some mills opt for the discounted Jimblebar fines to save costs.