Iron ore futures rose for the second consecutive trading day, amid falling steel stocks and market anticipation of better restocking activities ahead.
The futures of Dalian Commodity Exchange (DCE) for January delivery then inched up by 0.89% day-on-day or up RMB 6 to RMB 680/mt, during the day trading session on Friday.
The rebar futures, however, went down slightly by 0.12% day-on-day or down RMB 5 to RMB 4,315/mt, during the day trading session.
More restocking activities and output for low steel stocks
China’s retail steel stocks had declined for the straight three-month period to reach an almost one-year low of 13.6 million mt during Dec 24-30, down 0.3% weekly, according to Mysteel.
The low inventory was due to ongoing output restriction and thus trade participants expected better pre-Lunar New Year restocking activities and perhaps more ramping up of production to fill the shortfall.
Meanwhile, China’s production of HRC is expected to increase to 254.9 million mt for 2022, up 2.2% on-year from the output of around 250 million mt estimated for 2021.
This was due to more HRC capacity coming online in Southwest China that increased production as HRC consumption is set to gain by 2.2-2.3% yearly for 2022.
Rising blast furnace capacity after maintenance periods
China’s blast furnace capacity utilization rate had risen for the second consecutive week to 75.79% during Dec 24-30 period, up 1.46% on-week, according to Mysteel.
As Chinese mills based in Eastern China had resumed their operations after scheduled maintenance works and managed to recover from previous three weeks of declining utilization rates.
Some trade participants also felt some easing of the output restriction for those mills that complied with environmental standards and thus ramped up production.