Iron ore futures rose for the third consecutive day on market optimism over higher steel output after the lifting of production restrictions.
The futures of Dalian Commodity Exchange (DCE) for January delivery then rose by 5.84% day-on-day or up RMB 34 to RMB 616.50/mt, during the day trading session on Wednesday.
The rebar futures also increased by 3.23% day-on-day or up RMB 141 to RMB 4,502/mt, during the day trading session.
Rising steel prices and growing output for December
Market optimisms were lifted by higher steel prices and better margins, which rebounded from the recent negative or near breakeven levels, according to market estimates.
Thus, Tangshan billet prices rose toward the RMB 4,300/mt level on Wednesday, almost a two-week high from a series of price corrections since mid-November. Moreover, the domestic rebar prices also rose for the second consecutive day to RMB 4,766/mt as of Nov 23.
Due to the optimism, many mills decided to ramp up production in December, though some market participants urged for caution with regards to the Winter Olympics that might introduce another round of output restriction to improve air quality.
Slowing steel output from China in October
China’ steel output that accounted less than half of the global steel production at 49.1% during October, down 10.6% on-year, based on data from World Steel Association (WSA).
The slowdown was quite significant as China’s steel output usually contributed around 50-60% of the world total steel production, but apparently the country’s output was curtailed by state policy of not exceeding previous year steel output levels.
Thus, the global crude steel production reached 145.7 million mt in October, down from the straight consecutive five months, though there were significantly higher output from Turkey and Brazil.