Construction steel rebar on the Shanghai Futures Exchange fell 1%, while hot-rolled coil slipped 0.3%. Still, Shanghai's most-traded steel contracts are among this year's top gainers in China's ferrous metals complex.
"On top of that, the seasonal restocking cycle of national steel inventories is drawing to a close, with the growth in stocks slowing this week, meaning that some mills will soon start to moderate capacity utilization rates," he said.
"Australian miners' output is expected to lift only marginally, leaving the Brazilian giant, Vale, crucial to the overall recovery in supply," he said in a monthly outlook.
However, trading in spot and futures markets for iron ore and steel has thinned ahead of China's week-long Spring Festival holiday beginning on Thursday.
After the holiday, Widnell said "leading indicators will be the pace at which warehouses restock steel, rebounding blast furnace capacity utilization rates, and slower arrivals of Australian and Brazilian iron ore - all of which should be price supportive".
