Iron ore futures rebounded for previous losses, supported by supply tightness and market talks of relaxation of output curb in Tangshan by July.
The futures of Dalian Commodity Exchange (DCE) for September delivery then jumped up by 3.99% day-on-day or up RMB 45 to RMB 1,173/mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange also went up by 1.44% or RMB 70 day-on-day to RMB 4,934/mt.
Relaxation of output curbs in Tangshan
Market sentiments were boosted by possible relaxation of blast furnace operation in Tangshan from July, though sintering curbs were expected to remain in place to comply with stricter environmental regulations.
However, it was yet to be confirmed by Chinese authority, which some trade participants believed that it would lead to more steel demand in July.
Some trade participants doubted the potential demand uptick, as some Tangshan-based mills had plans for plants maintenance in near term amid weak margins.
However, the supply tightness situation among Chinese ports for iron ore products like PBF, BRBF and Carajas fines supported higher prices, as most Chinese mills sticked to mainstream fines for blending.
Rising global crude steel production from Covid recovery
Global crude steel production was on recovery mode with China leading the rest of world with substantial lead.
In total, the global crude steel output recorded 174.4 million mt in May, up 16.5% on-year with China contributing 99.5 million mt, up 6.6% on-year.
India came on the second at 9.2 million mt, up 46.9% on-year, though monthly comparison dipped slightly by 0.9% due to resurgence of coronavirus infection.
Despite the high May output figure, there were some market doubts on whether China can keep up with high steel output in June, which was a typical poor seasonal steel demand period, affected by rainy weathers.