Iron ore futures extended gains on tightening supplies concerns, amid healthy margins and better steel prices.
The futures of Dalian Commodity Exchange (DCE) for January delivery then rose by 3.07% day-on-day or up RMB 22 to RMB 737.50/mt, during the day trading session on Wednesday.
The rebar futures also went up by 2.32% day-on-day or up RMB 105 to RMB 4,632/mt, during the day trading session.
Higher steel prices amid mills’ maintenance periods
According to Mysteel, Chinese domestic steel prices had moved in upward momentum since Jan 7, especially for rebar, billet and HRC prices that improved on better demand.
For instance, rebar prices ended two weeks of slump to reach the RMB 4,700s/mt price tag, while some similarity was seen in billet and HRC prices that bottomed up from weeks of decline to reach RMB 4,300s/mt and RMB 4,800s/mt respectively.
Some trade sources linked the higher steel prices to the scheduled maintenance period conducted by the Chinese steel firms during the Q1, while others pointed to better steel consumptions from the automakers and manufacturers.
Better daily steel production recorded in early Jan 2022
Chinese daily crude steel production reached an average of 2.49 million mt/day during the first ten days of January 2022, up 4.1%, according to Mysteel.
The daily output increase was due to more productions coming from mills based in northeastern China, as previous production restrictions placed on these mills had been eased gradually.
However, some trade participants expected some potential output curbs ahead of the upcoming Winter Olympics, as well as market concerns over the spread of Omicron to bring about stricter lockdowns measures in Chinese cities like Tianjin.