Iron ore futures booked slight gains after the recent bullish run due to better steel prices and margins.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange rose by 0.96 % or RMB 8 day-on-day to RMB 838 /mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange however, went down slightly by 0.13% or RMB 5 day-on-day to RMB 3,826/mt.
Slowing rebar production in early November
Perhaps, the flattish DCE were concerned over the slowing rebar output as demand is expected to slow down during the winter season.
During the Oct 29-Nov 4 period, the country’s weekly rebar output reached 3.59 million mt, down 1.1% week-on-week, after surveying 137 Chinese mills by Mysteel.
Despite the declining output, the domestic demand for rebar remained strong, as construction firms made the last push for construction activities before winter season.
The firm rebar demand had since drawdown traders’ stocks for the fourth consecutive week, which dropped by 8.1% week-on-week to 8.9 million mt as of Nov 5.
Slight gain for daily steel output
Similarly, it seemed like there was some slowdown in daily crude steel production as well, with the winter season approaching.
According to Mysteel, the daily crude steel production gained slightly by 0.8% week-on-week or 22,400 mt per day to average 2.95 million mt per day for the November 1-10 period.
Meanwhile, some trade participants expect higher steel output till the end of November, due to high domestic rebar margins estimated at $60.10/mt at Nov 10, almost doubled as compared to previous week.