Iron ore futures dipped despite some rally at the closing session, due to market concern over rising supply.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange went down by 1.14% day-on-day to RMB 783/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange were flattish and booked a small gain of RMB 12 or 0.32% day-on-day to RMB 3,748/mt.
High Australia iron ore exports in October
Higher Australian iron ore export volumes had attributed to an eight-month high Chinese port inventory at 128.95 million mt as of Oct 30.
During October, Australian bank, Westpac estimated Australian iron ore exports at 78 million mt, up 5.4% month-on-month, due to lesser maintenance activities by major miners which were typically scheduled during this period.
Besides Australian exports, there was also rising Brazilian iron ore exports bound for China, as Brazilian miners tried to catch up on shipments to fulfill their guidance by year-end.
Last hurrah before winter season
There was a pickup of construction activities recently, as construction firms rushed to complete building projects right before the winter season.
As such, there was some improvement in steel margins, in line with better downstream steel demand and stable iron ore prices.
Going ahead, the pellet demand is expected to rise due to supply tightness among port stocks. Moreover, the supply of Indian fines was limited as well, prompting more end-users to seek other pellets sources from the US and Chile to prepare for the winter sintering cut season.