Iron ore futures opened high, but only to flatten at the afternoon closing session, amid strong Chinese steel demand.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then rose by 1.39% day-on-day or RMB 15.50 to RMB 1,131/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange also went up by 2.52% or RMB 115 day on-day to RMB 4,686/mt.
High steel demand in post-holidays
Chinese steel demand remained high from improved pandemic conditions, while supply concerns over Tangshan output cut also support higher steel prices.
According to Mysteel, the demand or five main steel products in China, such as rebar, wire rod, hot rolled and cold rolled products, and medium plates, had risen by 24% on-week to 7.43 million mt, as of Feb 25.
Market optimism was especially high for hot rolled coil products, which are used for manufacturing consumers goods like cars and home appliances.
As market experts expect higher international demand for Chinese manufactured goods this year from the recovering global economy.
High daily steel output in mid-February
China Iron & Steel Association (CISA) recorded higher mills’ steel daily output during Feb 11-20 period at the average of 2.28 million mt per day, up 3.5% or 128,000 mt per day from ten-days previous period.
The higher daily output rates were due to the return of more mills’ production after the holidays, such as the electric-arc-furnace (EAF) steelmakers which had mostly resumed operations after the Spring festival holidays.
However, the recent output curb in Tangshan is slated to reduce the daily average steel output toward end-February with stricter controls to improve air quality.