Iron ore futures ended the week on gains, despite market concerns over the strict lockdown measures and impact on steel demand.
The futures of Dalian Commodity Exchange (DCE) for May delivery rose by 3.54% day-on-day or up RMB 28.50 to RMB 833.50/mt, during the day trading session on Friday.
The rebar futures also increased by 1% or up RMB 49 day-on-day to RMB 4,953/mt, during the day trading session.
Not so strict closed loop system in China
The closed-loop system or lockdown in Chinese cities seemed to have eased, as city authority of Shenzhen were told to resume production in an ‘orderly manner’ by Beijing policymakers, according to Bloomberg.
Previously, the city of Shenzhen with 17.5 million population was under lockdown since Sunday, after a bout of rising covid cases. However, the lockdown measures had relaxed in Yantian port as well as some partially eased lockdown measures on industrial districts.
Though, some trade participants felt that there were some logistic disruptions in southern China for the steel industry, as the supply chains were being held back by lockdown measures.
Port inventory draws down amid better blast furnace utilization rate
There had been some draw down of iron ores among the port inventory, as Mysteel reported total Chinese port inventory at 154.97 million mt, down 2.17 million mt weekly for the week ended Mar 18.
However, the mills’ steel stocks had increased by 4.8% week-on-week to 6.21 million mt during the Mar 10-16 period, after Mysteel’s survey of 184 Chinese mills. The rising steel stocks were the testament of improved domestic steel production with the easing of output curbs after the Two Sessions and Paralympics events.
As Mysteel recorded Chinese blast furnace capacity utilization rate among mills had rebounded by 2.1% weekly to 81.88% as of Mar 17, in contrast to previous week of decline.