Iron ore futures opened on high but followed downtrend movement at the end of afternoon session, despite high steel prices.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), dipped slightly by 0.28% day-on-day or up RMB 3 to RMB 1,059/mt on Friday.
The steel rebar contract on the Shanghai Futures Exchange, however bounced up by 2.94% or RMB 135 day-on-day to RMB 4,729/mt.
High steel prices amid lower inventory
Tangshan billet prices jumped by RMB 140 on-day to RMB 4,430/mt on Friday, due to lower steel stocks among mills and traders.
According to Mysteel, Chinese mills’ steel inventory dipped for the third consecutive weeks on improved steel demand.
Mills’ steel stocks comprising of wire rod, hot-rolled coil, cold-rolled coil and medium plate, went down by 1% on-week to 9.6 million mt during the Mar 4-10 period.
Similarly, Chinese traders’ steel stocks also went down over the Mar 5-11 period to 34 million mt, down almost 1% on-week, due to higher steel consumption.
Stricter crackdown on steel output to improve air quality
China’s Ministry of Ecology and Environment (MEE) had tightened its crackdown on mills failing to comply with strict carbon emission standards in Tangshan.
According to trade source, another four steel mills were found to violate environmental regulations that resulted in heavy air pollution.
Meanwhile, MEE pledged to help steel mills to reduce air pollutants by eliminating outdated capacity, which raised some market concerns over extended tighter production controls in near term.