Iron ore futures made small gain for the day due to the high steel stocks and little price movement in steel products.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange stayed almost flattish but inched up by 0.36% day-on-day to RMB 825 per tonne on Monday.
The steel rebar contract on the Shanghai Futures Exchange also posted small gain of 0.69% day-on-day to RMB 3,637 per tonne.
Rebar prices to stay rangebound
Chinese rebar prices are expected to remain rangebound for the week of Oct 12-16, due to build-up of steel stocks over the weeklong holidays period in early October.
As of Oct 9, the traders’ stocks of rebar, wire rod and bar-in-coil reached a record-high at 347,683 tonnes/day, up 93.4% from September 30 or pre-Golden week, according to Mysteel.
Meanwhile, the iron ore port inventory also went up to a seven-month high of 120.6 million mt for the week ended Oct 9, up 0.5% or 1.5 million tonnes from September 30, based on Mysteel data.
However, China’s blast furnace capacity utilization had recovered 0.17% from September 30 to 93.2% as of October 9, among 247 steel mills , which may consume more iron ore feedstocks in near term.
Medium grade ores for the main feedstocks
Most Chinese mills had switched back to medium grade fines due to recovering margins and improved cost-benefit compared to low grade fines.
Meanwhile, some mills were even considering more utilization of high-grade fines due to anticipation of stricter sintering restrictions in winter season.
In meantime, lump demand is expected to strengthen for upcoming winter season, but the high dockside stocks had limited upward movement of lump premiums.