Iron ore futures jumped on better post-Lunar New Year demand, which resulted a rally in the afternoon session.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), jumped by 5.26% day-on-day or RMB 49.50 to RMB 991/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange also rose by 1.94% or RMB 81 day on-day to RMB 4,246/mt.
More stimulus after Spring Festival holidays
Market participants expected the Chinese authority to implement supportive economic policy to spur the real estate sector after the Lunar New Year holidays.
Moreover, the construction activities are slated to intensify during the warmer weather of Spring season, which might result a swift recovery in construction activities after the winter lull.
However, some market participants also urged cautions against market optimism, in view of the low steel margins, lower mills’ steel production and weaker than expected post-holidays replenishment.
Vale to bring back more production for 2021
Brazil’s Vale planned to ramp up its iron ore output capacity to 350 million mt per year, up 8.7% year-on-year, after achieving lower production in 2020.
Last year, the major miner produced 300.4 million mt of iron ore, down 0.5%, due to various outages in its mining operations.
For 2021, Vale is slated to bring back 17 million mt of capacity from its Brucutu mine by the fourth quarter this year. Pellet output is also expected to improve this year, after a restart of 7 million mt pellet operations last month.
Despite the higher production, Vale’s iron ore shipments are normally slowed during the first quarter of 2021, due to rainy season in Brazil.