Iron ore futures opened flatly on Wednesday morning session before recording a rally at the afternoon session, despite slow steel demand and improving supply.
The futures of Dalian Commodity Exchange (DCE) for September delivery then rose by 3.69% day-on-day or up RMB 31 to RMB 871.50/mt, during the day trading session on Wednesday.
The rebar futures also hiked up by 2.38% day-on-day or RMB 128 to RMB 5,507/mt, during the day trading session.
More shipments from Australia and Brazil
Market participants expected some easing of supply tightness as Australian iron ore exports had increased significantly during the Aug 2-8 period, while Brazilian shipments dipped slightly on weekly basis.
According to Mysteel, the Australian and Brazilian iron ore shipments rose by 3.8% or 942,000 mt week-on-week to 25.7 million mt, during Aug 2-8 period.
The higher shipments were met with typical lull season in China with lower construction activities affected by bad weather conditions, which led some traders to expect in some price corrections over near term.
Improving blast furnace profits among Chinese mills
The recent lower iron ore prices had improved steelmaking profits of Chinese mills, after a survey of 91 mills done by Mysteel.
Chinese mills’ average margins on rebar sales reached a gain of RMB 297/mt in July, reversing for a loss of RMB 147/mt in June, due to high raw material costs in making steel products.
Besides, the price stability of the steel products also contributed to blast furnace profits, as state regulators introduced more measures to curb market speculations and malpractices to firm commodity prices.