Chinese steel futures edged up on Thursday in more range-bound trade ahead of the Lunar New Year holidays, while iron ore slipped after a three-day advance spurred by a disruption in supply from Rio Tinto’s export facility in Australia.
The most actively traded May rebar on the Shanghai Futures Exchange was up 0.8 percent at 3,554 yuan ($526.50) a tonne by 0229 GMT. Hot rolled coil was at 3,452 yuan, up 0.8 percent.
“Trading is getting slower this week ahead of the Chinese New Year holidays (in early February),” a Shanghai-based trader said. “I don’t think there will be much change in the market, especially from next week.”
For the moment, prices will likely stay at current levels, with no additional demand for steel expected until after the holidays, the trader said.
While there has been some buying support for steel since the start of the year on hopes that Chinese moves to stimulate its slowing economy will boost demand, the pressure of oversupply persists.
The country’s iron and steel association has said that since 2016, the world’s largest steel maker has eliminated nearly 300 million tonnes of outdated steel production capacity and low-grade steel capacity, but around 908 million tonnes still remain.
Prices of steelmaking raw materials iron ore and coking coal edged lower following recent gains.
The most traded iron ore, for May delivery, Xian avisen import and export ltd ,stainless steel coil tube ,on the Dalian Commodity Exchange was down 0.7 percent at 509 yuan a tonne, after a 0.9-percent gain over the last three sessions amid ongoing supply-related issues.
“The impact of the disruption at Cape Lambert (export terminal), which has been partially shut by Rio Tinto due to a fire, continues to keep traders anxious,” ANZ Research said in a note.
Rio Tinto said on Monday it has declared force majeure on iron ore shipments to some customers following the fire last week.
Coking coal edged lower by 0.3 percent to 1,227.5 yuan a tonne, while coke was up 0.4 percent at 2,029 yuan.
Spot iron ore for delivery to China SH-CCN-IRNOR62 was steady at $74.80 a tonne on Wednesday, according to SteelHome consultancy.