Iron ore futures hiked up on Thursday trading session, finding supports from high steel prices, though market concerns over the upcoming production cuts.
The futures of Dalian Commodity Exchange (DCE) for September delivery then went up by 1.61% day-on-day or RMB 19.50 to RMB 1,234/mt during the day trading session on Thursday.
The rebar futures also inched up by 0.87% on-day or RMB 48 to RMB 5,546/mt, during the day trading session.
Steady construction steel prices predicted for H2 2021
The rising steel prices had mirrored Mysteel’s expectation of rebounding construction steel prices, during the second half of 2021, due to Chinese government policy of output curbs.
Thus, Mysteel expected rebar prices to rise in H2 2021, though the degree of the uptick will be determined by demand-supply balance rather than market speculation and hoarding practices.
However, China’s hot-rolled coil (HRC) prices are slated to decline during the H2 2021 period due to lower export volumes and declining demand for heavy machinery after the buildup in the first half of the year.
High H1 steel production in China
China produced 563.3 million mt of crude steel during H1 2021, up 11.8% year-on-year, according to the country’s National Bureau of Statistics (NBS).
The high steel growth was linked to the growing fixed asset investment (FAI), which grew by 12.6% on-year to RMB 25.6 trillion or $4 trillion during H1 2021.
One the main contributors of the FAI belonged to the property market, which went up by 15% on-year to RMB 7.2 trillion, based on the data of NBS.
However, many trade participants expected China’s H2 crude steel output to fall due to Chinese authority’s effort to cut down carbon emissions.