Iron ore futures settled for gains after a choppy day session, amid lockdown worries in China and poor steel margins.
The futures of Dalian Commodity Exchange (DCE) for May delivery rose by 2.61% day-on-day or up RMB 21 to RMB 826.50/mt, during the day trading session on Wednesday.
The rebar futures also inched up by 0.98% or up RMB 47 day-on-day to RMB 4,864/mt, during the day trading session.
Chinese mills Chinese production of iron ore concentrates reach 7 months high
Despite market worries of low steel demand from widening lockdowns, China produced 21.9 million mt of iron ore concentrates in March, up 10.7% on-month after recovering from previous week dips.
The seven high month production was linked to higher output from mining companies based on northern and northeast China, even though there was some covid restrictions that limited logistics.
The better demand of concentrates also provided incentives for miners to ramp up productions, which contrasted with production of iron ore lump.
As the high coke prices had reduced Chinese mills’ consumption of the iron ore lumps, despite domestic lump products being offered at competitive pricing range.
No end in sight for Chinese lockdowns
Some Chinese mills were heard to be restocking iron ores ahead of the long Labor Day holidays period in early May.
Most of them preferred to procure the low and discounted medium grade fines, due to the poor steel margins and constant worries and the widening lockdowns of more Chinese cities to contain the pandemic.
For instance, Beijing, the capital city, and home to around 20 million residents had undergone largescale testing for Covid-19 since the start of the week, leading to market concerns over possible lockdown that dampened steel demand.