Iron ore futures rose on Tuesday morning session, rebounded from previous losses seen last week, as market sentiment improved.
The futures of Dalian Commodity Exchange (DCE) for September delivery then increased by 6.17% day-on-day or up RMB 47.50 to RMB 817.50/mt, during the day trading session on Tuesday.
The rebar futures also rose by 2.39% day-on-day or RMB 122 to RMB 5,235/mt, during the day trading session.
Higher rebar production lifts market sentiments
China’s rebar production showed an increase of 1.1% on-week to reach 3.25 million mt during the Aug 12-18 period, according to Mysteel.
The rising rebar output helped to lift some bearish market concerns over China’s steel consumptions as rebar rolling capacity utilization rose slightly by 0.8% on-week to 71.2%, based on Mysteel’s survey of 137 Chinese mills.
The slight increase in rebar production was in preparation for the typical peak construction season in Sep-Oct period, though the market sentiments were dampened by ongoing steel output cuts and lower steel margins this year.
Better HRC margins during August
Besides better rebar production, the average hot rolled coil (HRC) had also risen to respectable $85/mt over the Aug 1-20 period to lift market confidence on steel demand.
Despite the higher margins, there was still much market uncertainty over the prolonged steel output cuts adopted by the Chinese policymakers, which might extend to September and till the end of the year.
There were also market concerns over declining domestic prices of HRB400E 20mm dia rebar over the August 16-20 period, as HRC prices dropped RMB 115/mt on week to RMB 5,245/mt, which raised doubts over sustainable margins for rest of the year.