DCE gains despite late sell-off

Dalian Commodities Exchange (DCE) made a third consecutive day gains on Wednesday, despite a selloff during the afternoon session.

The most-traded January 2020 iron ore contract on DCE closed at RMB 661 a tonne, up 1.54% on-day, after trading at the day-high of RMB 655 a tonne and day-low of RMB 646 a tonne.

The rebar contract, however, went down slightly by 0.29% on-day to RMB 3,795 a tonne.


Sell-off at late afternoon session

The DCE achieved to a day-high of RMB 665 a tonne during 2 pm at the afternoon session, before nose-diving to low level of RMB 646 a tonne.

According to trade source, the market plunge was due to selloff by a Chinese trading house which caused the DCE to languish at RMB 646 – 649 a tonne levels for a while.

Later, the DCE saw a recovery toward the close of the afternoon session and climbed back sharply to the RMB 660 a tonne level before finally closed at RMB 661 a tonne.


More infrastructure projects from China

The roller coaster ride of DCE may be reacting to new infrastructure construction projects handled out by the Chinese authorities.

According to the country’s economic planning agency, a 699-kilometer high speed railway will be built to link the southwestern cites of Chongqing and Kunming which was estimated at RMB 141.6 billion or USD 19.9 billion.

The railway project is expected to boost regional economy and the construction period may last over the next six years.  

Going forward, the iron ore paper market may continue to be bullish over the short-term period. This were due to active restocking from Chinese mills and market anticipation of more stimulus infrastructure projects introduced by the Chinese authorities.