Iron ore futures extended bullish run over market concerns over labor shortage among Australian miners and market optimism better steel demand post-Spring festival.
The futures of Dalian Commodity Exchange (DCE) for May delivery then hiked by 3.40% day-on-day or up RMB 25.50 to RMB 776/mt, during the morning trading session on Wednesday.
The rebar futures also inched up slightly by 0.36% or up RMB 17 to RMB 4,694/mt, during the morning trading session.
Global steel production increases by 3.6% during 2021
Global crude steel production hit 1.91 billion mt in 2021, up 3.6% on-year, according to World Steel Association (WSA).
As usual, China accounted over half of the world’s total steel production of 1 billion mt during the year as per its annual targeted output. This was rather similar to 2020 production levels as the country pledge to cut down on industrial emission and overcapacity.
For 2022, the country’s policymaker had yet to disclose annual production level, but trade sources felt it is likely to hit the similar 1 billion mt output level, or perhaps lower given the stringent emissions control measures.
Labour constraints to affect mining operations
Australian miners like BHP and Rio Tinto warned of possible output disruption due to the labour shortage from climbing Omicron cases that imposed on stringent social distancing measures.
Moreover, FMG also joined the chorus, hinting possible constrained labour issues that will affect supply chain in production and shipments.
According to media sources, the mining stock of FMG had slid more than 4% from the previous week, while Rio Tinto’s stock went down by 0.6%, and finally BHP down 1.2%.