Iron ore futures closed higher on Tuesday, recovering from the slump yesterday, due to the extended supply tightness situation.
The futures of Dalian Commodity Exchange (DCE) for September delivery then went up slightly by 0.28% day-on-day or RMB 3.50 to RMB 1,233/mt during the day trading session on Tuesday.
The rebar futures, however inched down by 0.20% on-day or RMB 11 to RMB 5,601/mt, during the day trading session.
Iron ore shipments drop to a two-month
Market participants were concerned with the low iron ore arrivals to China, which dipped to a two-month low from Australian and Brazilian shipments during the Jul 12-18 period.
During the mid-July period, both countries’ iron ore shipments went down by 2% or 484,000 mt week-on-week to 23.3 million mt, based on Mysteel’s data.
Australian iron ore exports had reportedly fallen to a three-month low to 16 million mt, down 1.6% week-on-week, due to scheduled maintenances of miners and terminals.
Better margins to raise steel productions
Despite the recent slump of steel margins, Platts estimated some improvements in profit margins for domestic HRC and rebar at $88/mt and $24/mt respectively as of Jul 16, up $67/mt and from negative $1/mt week-on-week.
Thus, Chinese steel production showed a slight rebound as rebar output reached
3.55 million mt during the Jul 8-14 period, up 3% week-on-week, after the relaxation of output restriction imposed in early July.
Moreover, Chinese electric-arc-furnace (EAF) producers were heard to ramp up production on better domestic steel prices since early July, as the Tangshan billet prices remained high at RMB 5,180/mt as of Jul 20.