Chinese futures rose on Wednesday despite some earlier losses at the start of the session.
As such, the most-actively traded iron ore futures for September 2020 delivery on the Dalian Commodity Exchange (DCE) rose by 1.16% day-on-day to RMB 613 per tonne on Wednesday.
Likewise, the steel rebar contract on the Shanghai Futures Exchange also increased by 1.47% to RMB 3,375 per tonne.
China’s fixed asset investment (FAI) to rise on second half of 2020
China steel sector might get a boost during the second half of the year for rising spending on infrastructure.
Trade sources cited that the country’s fixed asset investment or FAI growth rate might increase to 10% year-on-year in 2020 as compared to 3.8% in 2019.
The increase might be taken as part of stimulus package from the Chinese policymakers as the FAI recorded a slump of 19.7% rate in the Q1 2020.
Thus, some trade participants expected more infrastructure construction activity to commerce in May–June period, with more details provided after the country’s National People Congress meeting scheduled to hold in late April or early May
Rising shipments from Australia and Brazilian suppliers
Despite expected rising infrastructure spending, some trade participants were concerned about high volume of shipments from Brazilian and Australian iron ore miners.
According to mysteel, the iron ore shipments from Brazil and Australia had surged by 3.5 million tonnes last week to 23.28 million tonnes.
The higher shipments were attributed to better weather conditions in Brazil and Australia that normalize mining operations and increase iron ore exports.
However, trade participants were concerned if China can digest all these cargoes amid weak global steel demand outlook, worsening by the coronavirus pandemic.