Iron ore futures rallied further on Thursday, recovering loss ground from recent slump, as the steel market entered traditional peak season.
The futures of Dalian Commodity Exchange (DCE) for September delivery then inched up by 0.74% day-on-day or up RMB 6 to RMB 816/mt, during the day trading session on Thursday.
The rebar futures however, dropped by 2.52% day-on-day or RMB 132 to RMB 5,108/mt, during the day trading session.
Picking up of restocking activities due to low prices
According to trade sources, the restocking activities had picked up ahead of the typical peak steel period during September and October.
Some trade participants believed that the recent price corrections had made mainstream fines products attractive again for larger mills, which increased their intakes of medium grade fines like PBF.
Other trade participants however, remained more skeptical and only purchased on smaller lots by need-basis, as they expected more market uncertainty from bad weathers and more output cuts ahead.
Lower lump demand amid high coke prices
There was growing market concerns over the high coke prices that affected demand for lump, while lump supplies for mainstream and non-mainstream products remained abundant in market.
Domestic coke prices had undergone few price upticks, with proposal for a sixth round of price upticks at RMB 120/mt, due to tight supply. Lump premiums then suffered under the high coke prices, as mills reduce usage of lump in the blast furnace mix.
However, some market participants expected that the high coke prices might lift pellet demand, as it requires less consumption than lump. Thus, some Chinese buyers were heard to seeking for pellet cargoes at a low price below the $170/mt level.