Iron ore futures opened high before plunging at the close, as the market digested the economic data from China.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange then dropped slightly by 0.38% day-on-day to RMB 781 per tonne on Monday.
The steel rebar contract on the Shanghai Futures Exchange also recorded a slight loss of 0.06% day-on-day to RMB 3,611 per tonne.
China’s GDP on the rise for Q3
China’s Q3 GDP recorded 4.9% in Q3 2020, higher from previous registered growth of 3.2% in Q2, however below market expectation of 5.5%.
The improvement in growth was attributed to better exports and gradual improvement in domestic consumption, according to Morgan Stanley.
The growth followed higher China’s industrial production, which grew by 6.9% on-year in September due to better industrial activities in the manufacturing, mining, and utilities sectors, according to country’s National Bureau of Statistics (NBS).
Mixed outlook for steel demand
Despite the good economic indicator, some trade participants were concerned about softening steel demand and high steel inventory.
Construction activities were expected to slow down for the upcoming winter season, while the missed market forecasts for China’s GDP growth might affect market sentiment on steel consumption.
However, some trade participants expected stronger demand for Brazilian low alumina fines in November as steel mills prepared for environmental curb in upcoming winter season.