Iron ore futures rose in the day session, after a slow start at the beginning of the week, due to market concerns over declining steel demand.
The futures of Dalian Commodity Exchange (DCE) hiked by 5.32% day-on-day or up RMB 41.50 to RMB 821/mt, during the day trading session on Wednesday.
The rebar futures also increased by 1.98% or up RMB 91 day-on-day to RMB 4,681/mt, during the day trading session.
Steel prices to rebound from recent corrections
The upticks were partly contributed to the higher steel prices after recent corrective phrases, due to market concerns over Chinese cities’ lockdown impact on steel demand.
However, the Tangshan billet prices rose by RMB 20 to RMB 4,640/mt on Wednesday, after prices declined for almost a week. The higher prices led some trade participants to believe that billet prices had bottomed out of the recent lull.
They were also encouraged by more mills restocking from portsides, due to the import losses of obtaining seabourne cargoes.
However, the market optimism may be short-liven as Chinese steelmaking giant, Baoshan Steel decided to lower its list prices of carbon steel hot-rolled coil (HRC) by RMB 100/mt for June domestic sales, citing the Covid restriction as the reason.
Wet weather to affect Chinese steel demand
There were also market concerns over the upcoming wet season that may affect steel demand in China, especially in the southern provinces that were prone to heavy rains and flood.
Hence, the procurement of the seaborne iron ore remained lacklustre, as mills adopted cost saving measures and only imported on need basis.
According to Platts report, the buyers were keen in getting medium grade fines as compared to low grade fines, as they were cost effective in comparison.