Iron ore futures continued its bullish run after finding supports in possible easing of output cut in Tangshan and positive economic data from China.
The futures of Dalian Commodity Exchange (DCE) for September delivery then rose by 7.29% on-day or up RMB 79.50 to RMB 1,169.50/mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange went with the uptrend and hiked up by 1.95% or up RMB 98 day-on-day to RMB 5,128/mt.
Discussion to ease production cut in Tangshan
The buoyant futures market was linked to market talks of easing steel production cut in Tangshan, after city officials met on Monday and held a discussion.
According to local media, the city authority might grant some output leeways for some mills that completed their ultra-low emission installation to increase steel production.
However, nothing officials had been confirmed yet and the market uncertainty caused the Tangshan billet prices to stagnate at RMB 5,000/mt, after rallying RMB 200 or around 4% price increase over the weekend.
Good economic data on China economic recovery
Moreover, the recent positive economic data showed that China’s manufacturing sector was still growing despite high commodity prices which led to state intervention to suppress market speculation.
As such, the China’s Caixin/Markit Manufacturing PMI posted 52 points in May, a slight improvement from April reading at 51.9, while the official manufacturing PMI dropped slightly to 51 points in May in comparison to 51.1 readings in April.
Nevertheless, trade participants were also buoyed by positive trade economic data by the recovery in manufacturing sector, while the country’s steel PMI index also went up by 0.7 basis point on-month to 46.1 readings in May.