Reuters reported that two major iron ore indexes rose to a seven-month high on Wednesday, triggering concerns of a possible price correction in coming weeks after steel prices eased.
Tightening supply of high grade iron ore from India, as well as rising demand from Chinese steel mills ahead of the holiday season have pushed up import offers, while several traders expressed concern about the possibility of a modest correction in coming days.
An iron ore trader in eastern China said "It is not surprising to see prices ease from previous strong gains as the weekend is approaching, but there is now a divergence in market views on import prices after the Christmas holiday."
A few traders forecast the sharp gains to be sustained for a while as steel mills ramp replenish stocks ahead of Chinese New Year, while some were concerned that steel price uncertainties would lead to increasing hesitance among steel mills and traders to build high stocks.
The China Iron & Steel Association earlier projected that steel prices in China would remain volatile within a narrow range on weak demand in the winter season. The most active rebar futures on the Shanghai Futures Exchange SRBK1 traded at CNY 4,776 per tonne at GMT0302 down by 0.4% from Wednesday's close.