Iron ore futures opened high before dropping at the closing due to high port inventory and lower steel production.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange ended the afternoon session down by 2.38% day-on-day to a two-week low of RMB 798.50 per tonne on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange was largely flat and posted a small dip of 0.28% day-on-day to RMB 3,618 per tonne.
More iron ore shipment arrival and easing of port congestion
The declining prices were due to the build-up of supplies over the holidays period as Steelhome data recorded a six-month high of portside inventory at 123.6 million mt last week.
Port congestion had also eased among Chinese ports, which resulted in quicker offloading of cargoes that stocked up at the docksides.
Moreover, the market participants also expected more iron ore shipments for suppliers from Australia and Brazil in Q4, especially for Brazilian miners as they tried to push more shipments to meet their annual guidance.
Lower daily crude steel output in early October
China’s daily crude steel production reached an average of 2.94 million mt per day over the Oct 1-10 period, down by 0.7% or 20,900 mt per day, according to Mysteel’s survey of 318 Chinese steel mills.
The decline in average daily output was due to the scheduled maintenance undertaken by steel mills during the Golden week holidays, especially among the electric-arc-furnace (EAF) steel producers.
Meanwhile, the HRB 400 20mm dia rebar prices remained flattish with slight drop of RMB 1/mt day-on-day to RMB 3,828/mt on Tuesday, after rising for past four consecutive days based on Mysteel’s assessment.