Iron ore futures continued correction phrase as the cold weather affected steel demand and logistics in China.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) fell by 2.46% or RMB 25.50 on-day to RMB 1,010.50/mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange also slid by 1.53% or RMB 66 day on-day to RMB 4,234/mt.
Rebar production slows during year-end
Chinese rebar production dropped for the fourth consecutive weeks, due to maintenance period conducted by steel mills.
According to Mysteel, the rebar output fell by 0.6% on-week to 3.47 million mt for the Dec 17-23 period, among 137 steel mills surveyed.
Besides scheduled maintenances, the lower output was attributed to mills switching to produce other steel products, especially for the mills based in northeast China.
As the colder weather in northern China slowed construction activities and limited the usage of rebar, while some mills conducted maintenance as part of electric power saving program rolled out by the local authorities.
Australian and Brazilian iron ore weekly exports reach 18-months high
According to Mysteel, Australian and Brazilian iron ore shipments totaled 29.7 million mt over the Dec 21-27 period, up 18% on-week and the highest since the survey began in June 2019.
Mysteel’s survey was based on 16 miners and 19 ports on both iron ore producing countries at a weekly period.
The high shipments suggested miners of both countries tried to take advantage of the high iron ore prices to ship more cargoes as well as to catch up on their annual shipment guidance.
Meanwhile, some market participants expected some shipping disruption in near term, due to the cold wave hitting China, which might result in fog and strong winds in coastal regions.