Iron ore futures went down on lower steel prices, following the slowdown in Chinese construction activities as winter approached.
Thus, the most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange dropped by 1.20% or RMB 10.50 day-on-day to RMB 867.50/mt on Monday.
The steel rebar contract on the Shanghai Futures Exchange also followed the drop and went down by 1.11% or RMB 44 day-on-day to $3,911/mt.
Lower rebar prices for the week
China’s rebar prices are expected to fall over the Nov 23-27 period due to colder weather in the North China that slowed construction activities.
Thus, some of the steel demand is expected to divert to the warmer southern China provinces where construction activities are still taking place.
Despite the bearish weekly outlook, the price of the HRB 400 20mm dia rebar managed to grow for the fourth consecutive trading day as of Friday, Nov 20 at RMB 4,174/mt, down RMB 15/mt, based on Mysteel assessment.
Brazil’s supply issues to support market
Despite the lower expected rebar prices, the Brazilian rainy season over October to March period may support iron ore prices toward year-end.
For instance, the heavy rains in Brazil had affected iron ore shipments to China earlier this year. This resulted Brazilian miners, like Vale to catch up its shipments at the second half of 2020 to fulfill its annual guidance, albeit at the lower range of 310-330 million mt.
Moreover, China experienced warmer-than-usual autumn this year, which may allow construction activities to last longer than usual and support steel and iron ore prices into December.