Iron ore futures continued to book gains on increased restocking activities, ahead of coming long holidays in October.
The futures of Dalian Commodity Exchange (DCE) for January delivery then rose by 2.47% day-on-day or up RMB 16.50 to RMB 684.50/mt, during the day trading session on Friday.
The rebar future also dropped by 2.83% day-on-day or up RMB 159 to RMB 5,468/mt, during the day trading session.
Better restocking activities amid low inventories
Restocking activities had stepped up and resulted lower iron ore port inventory, though the declining inventory was partly caused by port congestion.
According to Mysteel, the total imported iron ore inventories reached to a one-month low of 128.6 million mt, down 1.2 million mt or 1% on-week, due to slow unloading of cargoes amid higher replenishment need from Chinese mills.
Moreover, the Chinese traders’ steel stocks also fell to a three-month low of 21.7 million mt as of Sep 23, down 2% or 451,000 mt on-week, due to better steel consumption as construction activities picked up gradually.
Lower crude steel output for Aug and mid-Sep
Despite better restocking activities, the Chinese mills’ blast furnace (BF) capacity utilization rate reached a three-month low at 82.06% over the Sep 17-23 period, due to power saving policies and the ongoing steel output cut.
The lower blast furnace capacity utilization trend had reflected in crude steel production in August as well, as the World Steel Association (WSA) recorded a total of crude steel output at 156.8 million mt, down 1.4% on-month.
The main contributor of the declining steel production was attributed to China which accounts over half of the world steel production but had since implemented emission controls and energy conservation policies to curb output.