Iron ore futures closed the week on high note, with much rally throughout the week due to market optimism over good steel demand.
The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE), for September delivery then rose by 1.19% day-on-day or up RMB 13 to RMB 1,104.50/mt on Friday.
The steel rebar contract on the Shanghai Futures Exchange, also hiked up by 1.67% or up RMB 87 day-on-day to RMB 5,299/mt.
Lower mills’ steel stocks amid high steel consumption
Chinese mills’ steel stocks fell for the consecutive ninth weeks to 6.8 million mt during Apr 15-21, down 4.5% on-week, according to Mysteel.
The steel stocks consisted of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate, after surveying mills’ stocks from 132 Chinese cities.
High steel consumption had resulted the low mills’ inventory amid the peak construction season and the output restrictions in Tangshan. This resulted in high sales profits for domestic rebar and hot-rolled coil sales estimated at $126/mt and $154/mt by Platts Analytics.
Higher steel capacity utilization rate despite output curb
Chinese steel mills’ blast furnace capacity utilization rates had increased for the third consecutive week to 88.75% during Apr 16-22 period, up 1.08% on-week.
According to Mysteel, the surveyed 247 steel mills had produced 2.36 million mt per day of molten iron output, up 28,700 mt per day on-week, due to strong steel demand and high margins.
The high steel production rates were recorded despite stricter output curb being imposed in the steelmaking hub of Tangshan, as many Chinese steel mills have reportedly ramped up production outside of Tangshan.