Iron ore futures continued to hike up on good Chinese pre-holidays restocking demand and robust steel demand.
The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE), for September delivery then rose by 1.89% day-on-day or up RMB 21.50 to RMB 1,158.50/mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange, also inched up by 0.54% or up RMB 29 day-on-day to RMB 5,411/mt.
Good margins amid production curbs
Chinese mills were well into their restocking activities ahead of the Labour Day holidays in early May, and they sought mainly on medium to high grade fines amid good steel margins.
According to Platts Analytics, the Chinese domestic rebar and hot-rolled coil sales profits were estimated at $128/mt and $165/mt respectively in late April, which were high enough to lift steel production outside of cities like Tangshan and Handan that were under output curbs.
Meanwhile, the China Iron & Steel Association recorded the country’s crude steel output at 3.045 million mt/day over April 11-20, a record high, amid ongoing steel production curbs.
High iron ore shipments to ease prices
The recent iron ore prices rally was caused by high steel demand and supply tightness of medium grade and high grade fines.
However, some trade participants expected some price correction ahead, as iron ore exports of Australia and Brazil had grown by 2.7% on-week to 24.7 million mt over Apr 19-25 period.
According to Mysteel, the Australian exports reached at a total of 19.5 million mt or 79% of the total exports, up 15% on-week and accounted higher volume than their Brazilian counterpart in exports.
This was due to better weather condition that allowed more shipment whereas previously exports were affected by cyclone and rainy seasons.