Iron ore futures rebounded and closed on high due to restocking demand ahead of China’s week-long National Day holidays in early October.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange hiked up by 1.58% day-on-day to RMB 803 per tonne on Friday.
The steel rebar contract on the Shanghai Futures Exchange stayed flattish and saw a small gain of 0.64% day-on-day to RMB 3,603 per tonne.
Restocking demand and flat port inventory
China’s port inventory stayed rather flattish with only small gains of 363,600 mt week-on-week to 114.93 million mt over the Sep 11-17 period.
The almost flat port inventory had some of the market participants questioning whether the tight supply of medium grade ores still persisted amid high restocking demand.
As Chinese end-users typically restocked iron ores ahead of the China’s week-long National Day holidays in Oct 1-7 period.
In the meantime, there was also some improvement in the port congestion with higher daily discharge volume at 3.18 million mt, up 37,700 mt on-week, based on data from Mysteel.
Better steel outlook in Q4
Trade participants were optimistic about steel demand in the Q4 as they expected more stimulus measures to prop up the Chinese economy.
Some market participants even suggested a mild production winter cut to support the iron ore demand at the last quarter of the year.
In the meantime, the sintering cut of Tangshan was heard to be over, but lump demand remained high as mills prepared for more sintering cuts over the winter season.