Iron ore futures remained flattish since market opening but benefited from a late rally in the afternoon session for gains.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange then rose slightly by 0.33% day-on-day to RMB 767 per tonne on Thursday.
Likewise, the steel rebar contract on the Shanghai Futures Exchange posted slight gain by 0.59% day-on-day to RMB 3,552 per tonne.
Switch by to medium grade fines
The usage of medium grade fines had once again the firm favorite of the Chinese mills as the high-low grade fines combination did not offer much cost-savings at the blast furnace mix.
It was heard that some mills with small to medium blast furnaces capacity had switched back to mid-grade fines for sintering which was more cost-efficient, following the recent correction of iron ore prices.
Moreover, the lump demand had also received much supports for port purchases as trade participants expect more stringent and frequent sintering controls in the upcoming winter heating season.
Peak is over for steel demand?
With iron ore prices falling from the $130/mt level since mid-September, some trade participants are wondering if the steel peak demand season had come to an end.
According to market sources, there were construction project delays in China due to heavy rain, flooding that resulted in lower steel demand and margins.
The credit lending to property and infrastructure sectors had also been tightened that resulted an easing in steel production during September.
According to Platts, the slowdown in steel production is expected to persist for a while, till steel demand and output pick up in the new year but at a slower pace.
Due to these bearish outlook, Morgan Stanley predicted iron ore prices to reach $100/mt level in Q4 and dropped later to $81/mt for 2021.