Iron ore futures moved flatly on Monday day session, and dipped at session close, following previous week of trading losses.
The futures of Dalian Commodity Exchange (DCE) for September delivery then dropped by 1.05% day-on-day or down RMB 8 to RMB 757/mt, during the day trading session on Monday.
The rebar futures, however rose by 1.55% day-on-day or RMB 78 to RMB 5,102/mt, during the day trading session.
Steel prices uptick ahead of peak season
Mysteel expected some upticks for the steel prices of rebar over the Aug 23-27 period, as some restocking activities may pick up ahead of the traditional steel peak season during Sep-Oct period.
However, some trade participants were skeptical, as steel demand were affected by the ongoing output curb, and market concerns over the Covid Delta infections in China.
Besides, the Chinese mills’ blast furnace capacity utilization rate remained low at 85.47% as of Aug 20, down 0.42% on weekly basis and these lower rates are expected to persist in near term.
EAF production to rise amid high coke prices
Chinese electric arc furnace (EAF) mills might increase their steel production, benefitting from the lower prices of scrap steel, amid higher costs of coke and coking coals.
So far, the domestic coke prices had undergone a fifth round of uptick at RMB 120/mt, for a cumulative price uptick of RMB 600/mt, that raised costs for steelmaking.
Some trade participants even expected that further upticks of coke prices, due to lesser supplies coming from Mongolia, as stringent measures were taken to limit the spread of Covid Delta infections across the China- Mongolia borders.
However, the high electricity costs and power saving policies adopted by some Chinese provinces might incur higher costs for the EAF mills and limited their output.