Iron ore futures extended the rally from last week, benefiting from the restocking activities and stable steel prices.
The futures of Dalian Commodity Exchange (DCE) for January delivery then rose by 3.53% day-on-day or up RMB 24 to RMB 703/mt, during the day trading session on Monday.
The rebar future also hiked up by 0.96% day-on-day or up RMB 53 to RMB 5,564/mt, during the day trading session.
Better steel prices amid extended steel output curbs
Mysteel expected further strengthening of rebar prices till the end of September, due to the ongoing steel production curbs.
In the meantime, the restocking activities were expected to intensify before the Chinese participants went off for the week-long public holidays over the Oct 1-7 period.
The lower steel production was reflected in among Chinese mills’ blast furnace capacity utilization, which dropped for the third consecutive week to 82.06% over Sep 17-23 period, the lowest level since July 2.
Stringent energy consumption policy restricts industrial output
Some steel mills also trimmed their output to comply with stricter power saving policies imposed on the Chinese provinces of Hebei, Anhui and Northeast China.
The power conservation policy did not confine to steel industry, but to other industrial sectors as well, as Apple and Tesla suppliers had also suspended their production in China, due to tighter energy consumption policies, according to Reuters.
Some trade sources saw the energy saving measures as part of Chinese authority strategy to save up more coals for heating purposes for the upcoming colder winter season.
As coal prices had risen to record-high recently amid tight supplies, while the informal ban on Australian coal remained intact, pushing Chinese buyers to seek for limited spot US and Canadian cargoes.