Iron ore futures rose higher on higher steel prices and margins, amid market concerns of stricter output curbs being extended to other Chinese provinces.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE), then rose for the third consecutive trading day by 2.74% day-on-day or up RMB 28.50 to RMB 1,067.50/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange, also hiked up by 1.31% or up RMB 62 day-on-day to RMB 4,795/mt.
Extension of output cuts outside of Tangshan
Some trade participants expected the strict production cut imposed in Tangshan may be extended to other regions as well, as Chinese authority tried to comply with stricter emission regulations.
During the output restriction, some mills found that the high and low-grade ores combination were less efficient than the usage of medium grade fines in the blast furnace mix.
However, the strict environmental controls continued to support lump and pellet premiums amid supply tightness in spot cargoes loading in April, while Indian pellet supply had also been declining as well.
Higher steel prices amid limited output
Chinese steel prices had surged up on limited production, as the Tangshan billet prices jumped by RMB 50/mt on-day to RMB 4,650/mt on Thursday.
However, there was some easing in the domestic rebar prices as the price of HRB400 20mm dia rebar declined for the second consecutive day to RMB 4,764/mt on Mar 24, down RMB 7/mt on-day.
Meanwhile, daily steel output continued to decline in China, as China Iron & Steel Association (CISA) estimated the country’s daily finished steel production to reach an average of 3.49 million mt per day over the March 11-20 period, down 0.8% from previous ten-day period.