Iron ore futures closed the week on high note, due to supply tightness and another round output curbs in Tangshan.
The futures of Dalian Commodity Exchange (DCE) for September delivery then jumped to a three-week high and went up by 5.90% on-day or RMB 69.50 to RMB 1,247/mt on Friday.
The steel rebar contract on the Shanghai Futures Exchange also hiked up by 3.74% or up RMB 192 day-on-day to RMB 5,322/mt.
More output curbs to reduce emissions
Tangshan’s city authority had imposed another round of output curbs on steel mills over the Jun 10-15 period to reduce carbon emissions.
This measure leads to higher steel prices as Tangshan billet prices rose RMB 30 on-day to RMB 5,010/mt by mid-day.
However, Shougang Group’s Jingtang and Qian’an steel mills were exempted by production curb as they met the ultra-low emissions regulations, according to local media.
Some trade participants also expected more production restriction to impose in other regions outside of Tangshan, which will tighten steel supply and lift steel margins further.
Iron ore inventory drops to four-month low
The future upticks were also pushed up by low iron ore inventory among Chinese ports as Mysteel recorded a total port inventory of 123.67 million mt for the week ended on Jun 11, down 1.68 million mt on-week.
The declining iron ore arrival saw significant drop of Australian iron ore coming to China with recorded volume of 63.18 million mt, down 2 million mt on-week, according to Mysteel’s data.
Besides, Australia’s Port Hedland shipment of iron ore volume also dropped in May, with a total of 48 million mt, while the actual iron ore shipment to China was recorded at 40.2 million mt, down 6.9% on-year, though up 10.7% on-month.