Iron ore futures hiked up at the start of the week, as steel production resumed after centennial celebration of political party in early July.
The futures of Dalian Commodity Exchange (DCE) for September delivery then rose by 5.51% day-on-day or up RMB 64 to RMB 1,225/mt at the close of day trading session on Monday.
The rebar futures followed the rally and went up by 2.09% on-day or up RMB 107 to RMB 5,222/mt, during the day trading session.
Short term spike from renewed output in Tangshan
Steel production had resumed in the steelmaking hub of Tangshan after Chinese authority eased output restriction and relaxed emission curbs after early July.
Thus, many market participants expected higher utilisation rates of blast furnaces among the 247 mills across China to reach higher than 81.01% as of Jul 2, from the production recovery.
However, some trade participants believed the Chinese authority may implement more production cuts during the second half of the year to comply with stricter emission standards.
More upticks for long steel prices during July
Mysteel expected long steel prices to recover from losses during the Jul 5-9 period, such as the rebar and wire rod products, due to anticipation of more output cuts in July to reduce emissions.
Though, the Chinese domestic rebar price dropped to a three-month low of RMB 4,942/mt as of Jul 2, down RMB 7 day-on-day.
Moreover, there was some supply tightness among Chinese miners’ iron ore stocks that is expected to support further price upticks. As Mysteel recorded a total of 1.2 million mt at Jul 1, at a two-year low, due to more mines suspension after failing safety inspection checks.