Iron ore futures rallied on high restocking demand and closed the day trading session on bullish note. The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) then, rose by 1.64% on-day or RMB 17 to RMB 1,055/mt on Thursday. The steel rebar contract on the Shanghai Futures Exchange was flattish throughout the day session but managed to eke out small gain at the close by 0.05% or RMB 2 day on-day to RMB 4,294/mt.
Better demand for high Fe content ores to reduce coke usage
The good restocking activities seemed to focus on the procurement for high grade ores like Carajas fines and medium grade ore with high Fe content like the Fe 63% BRBF and Newman fines. This was due to the high coke prices, which resulted mills to secure higher Fe content products to reduce coke usage in the blast furnace mix. Likewise, the iron ore lumps and pellets were sought after by mills for the same reasons or cost savings and led to more buying interests for Indian pellets.
Record-high iron ore import for China in 2020
Meanwhile, China imported a total of 1.17 billion mt of iron ore in 2020, up 9.5% year-on-year, according to the country’s General Administration of Customs. So far, the annual import figure of 2020 had surpassed previous record set in 2017 at 1.075 billion mt, as well as high import volume of 1.069 billion mt in 2019. The high import volume was due to the country’s infrastructure stimulus program that buoyed steel consumption for various construction projects to kickstart the pandemic-hit Chinese economy.