Iron ore futures rose for the third consecutive day since the start of the week, due to market optimism over possible easing of steel output curbs in Tangshan.
The futures of Dalian Commodity Exchange (DCE) for September delivery then rose by 2.77% on-day or up RMB 31.50 to RMB 1,168.50/mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange traded flatly and gained slightly by 0.50% or up RMB 25 day-on-day to RMB 5,002/mt.
Daily crude steel production reaches record-high level by end-May
The daily crude steel output among Chinese mills went up to record high level over the May 21-31 period, since Mysteel started the survey back in Jan 2018.
According to Mysteel, Chinese mills’ daily crude steel production ramped up on an average of 3.06 million mt per day, up 0.7% from mid-May, indicating good steel demand.
Despite the high daily crude steel output, the steel prices remained stable as Tangshan billet prices remained at RMB 5,000/mt level, unchanged over the span of four days.
More reduction in Chinese steel capacity to fulfill green initiatives
China pledges to reduce 236 million mt of steel capacity over the 2021-2025 period, as part of its 14th five-year plan, according to the China Iron and Steel Association (CISA).
Besides the capacity cut, the country also planned to upgrade 221 million mt of steel capacity by 2025 in its efforts to reduce carbon emission before 2030.
So far, China had already reduced 86 million mt of steel capacity and upgraded 80 million mt over the past five years, while had completed ultra-low emission upgrades for around 620 million mt of steel capacity by end-February this year.
Trade participants viewed the capacity cut as part of Beijing policymakers to fulfill their green initiatives in the steel sector, which contributed around 15% of total greenhouse gas emissions in China.