Iron ore futures rallied with the return of Chinese participants and market optimism over the post-holidays demand.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then soared by 7.05% day-on-day or RMB 74.50 to RMB 1,131.50/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange also hiked up by 3.26% or RMB 143 day on-day to RMB 4,529/mt.
High HRC output amid post-holidays market optimism
Chinese weekly production of hot-rolled coil (HRC) rose by 2.2% on-week to 3.4 million mt over the Feb 4-17 period, as mills anticipated better steel demand after the holidays.
According to Mysteel, the steel mills’ average hot rolling capacity utilization rate also gained by 1.92% fortnightly to 87.24% over the late-Jan to early Feb period.
Going forward, market participants expected Chinese steel production to resume quickly than previous years, as most of the migrant workers were heard not to return to their hometown for holidays celebrations, which made them to return to work sites and mills faster.
Recovery of ex-China iron ore demands
Outside of China, the demand of iron ore for steelmaking also improved among mills based in Japan, South Korea and Western Europe.
According to Refinitiv, the total global volume of seaborne iron ore discharged at port reached 134 million mt in January 2021, up 6.5% on-year, and up 9% on-month.
China’s seaborne iron ore imports accounted nearly 74% of the January’s total volume at 98.79 million mt, while the rest of world iron ore imports recorded at 35.21 million mt, up almost 3.3% on-year.
As such, Japan’s iron ore imports almost returned to pre-Covid level, after hitting an import volume of 7.68 million mt in January 2021, down slightly to 7.78 million mt recorded in January 2020.