Iron ore futures rallied at the close of afternoon session, due to market optimism over high steel demand during construction season.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then rose by 1.49% day-on-day or RMB 17 to RMB 1,154.50/mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange also went up by 1.83% or RMB 85 day-on-day to RMB 4,732/mt.
More restocking activities ahead
According to trade sources, market participants were bullish on iron ore restocking demand in the traditional peak construction season starting in March.
Though, there were some hinderances this year, due to unfavorable weather like snowy condition in northern China and rainy weather in southern China that slowed down construction activities.
However, the improvement in steel margins is slated to raise more iron ore restocking activities ahead, as some trade participants believed that the iron ore demand was not in full swing yet.
Higher spot construction steel sales
China’s spot sales of construction steel also continued to rally in post-holidays demand as buyers prepared for construction season ahead.
According to Mysteel, China’s spot trading volume of construction steel consisting of rebar, wire rod and bar-in-coil reached 121,448 mt per day, up 33,466 mt per day as of Mar 1.
The high sales volume had corresponded with the high daily crude steel output of Chinese mills as most mills resumed operations after the long holidays.
During Feb 21-28 period, Mysteel estimated that the daily crude steel output among China’s 318 steel mills at 2.86 million mt per day, up 3.3% as compared to previous ten-day period in mid-February.