Iron ore futures rose slightly, after opening high at the afternoon session but only to slump toward the close.
Hence, the most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange inched up by 0.57% day-on-day to RMB 880/mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange however, went down by 1.23% or RMB 48 day-on-day to $3,865/mt.
Better steel demand for winter season
The overall rise in the paper movement may reflect market sentiment of better steel demand during the winter season.
As they believed that the steel demand to remain robust in warmer southern China, in contrary to the colder weather in northern China that limited construction activities.
Therefore, more end-users might seek for more high-grade ores like Carajas fines in the near term, for their low silica and alumina content, amid high steel margins.
Some trade participants were also heard to be actively seeking January seaborne cargoes as they expected firmer steel demand and better restocking iron ore activities during the winter season.
China contributes over half of global crude steel output in October
Global crude steel production reached 161.9 million mt in October, up 7% on-year, according to World Steel Association.
Nearly 60% of the output was contributed by China at around 92.2 million mt in October, up 12.7% on-year, as Chinese economy recovered swiftly from the coronavirus pandemic.
Other steel-making countries recovered much slower from the pandemic, as seen from India with almost flattish crude steel production at 9.1 million mt during October, up only 0.9% on-year.
Meanwhile, Japan produced 7.2 million mt of crude steel in October, down 11.7% on-year, but rose by 11% on-month, due to the restart of blast furnaces after being idled at the early stages of the pandemic.