Iron ore futures extended bullish run due to encouraging economic data that indicated better manufacturing activities.
The futures of Dalian Commodity Exchange (DCE) for May delivery then rose by 5.51% day-on-day or up RMB 38.50 to RMB 737.50/mt, during the day trading session on Tuesday.
The rebar futures also rose by 3.75% or RMB 175 day-on-day to RMB 4,837/mt, during the day trading session.
Rebounding China’s PMIs after a weak start of the year
China’s Caixin manufacturing purchasing managers’ index (PMI) rose to 50.4 ratings in February, after a weak rating of 49.1 recorded in January 2022.
The high private PMI ratings was in line with office PMI rating of 50.2 recorded in February, as the country’s manufacturing orders increased during the month, despite supply shortages and interruptions from the Lunar New Year’s holidays and hosting of the Winter Olympic event.
According to National Bureau of Statistics (NBS), the manufacturing orders faced a slowdown due to the week-long Lunar New Year holidays, but trade activities soon picked up after that during the second half of the month.
However, the high inflationary pressure might limit growth in near term with higher prices of raw material and energy prices to eat into manufacturing earnings.
Portside materials preferred by Chinese end-users due to import losses
Despite the better steel market outlook, most of the Chinese buyers favored purchases of cheaper portside materials as compared to seaborne imports.
However, some of buyers were attracted by the wider percentage discounts of Super Special Fines, Fortescue Blend Fines and West Pilbara Fines by 38%, 24% and 18% respectively in March as compared to discounts of 35%, 23% and 16% in February.
But some buyers were doubtful as the latest discounts still resulted in import losses for some Chinese ports, though the April loading cargoes offered a better rate for some of the buyers.