Iron ore futures extended gains on the trading session, though restocking activities came to an end ahead of the long holidays in early May.
The futures of Dalian Commodity Exchange (DCE) rose by 4.19% day-on-day or up RMB 35 to RMB 869.50/mt, during the day trading session on Friday.
The rebar futures also hiked by 1.64% or up RMB 79 day-on-day to RMB 4,910/mt, during the day trading session.
Limited port inventories to push up prices
The declining port inventories also provided support to upward price movement, as Mysteel recorded iron ore inventories at 145.18 million mt, down 2.08 million mt week-on-week, for the week ended on 29 Apr 2022.
Meanwhile, the sales of rebar seemed to slow down ahead of the weeklong Labor Day holidays in China. As most end-users were heard to finish replenishing of stocks, though some small-scale purchases may occur, following the market expectation on easing of lockdown measures over near term.
In the meantime, high ferrous content products like Carajas fines were heard to be in tight supply and resulted in the delivery delays of term contract shipments for Chinese mills, due to congested ports and logistic constraints from lockdown measures.
Long vessels queue among Chinese ports
The low port inventories were probably due to the congestion in Chinese ports, which slowed down iron ore unloading.
According to Mysteel, there was around 109 vessels queuing for offloading cargoes, up by 5 vessels since last week, bringing an average daily iron ore discharge rate estimated at around 3 million mt/day as of 28 Apr 2022.
The port congestion is unlikely to go away in short notice, as the country conducted covid related lockdowns in major cities like Shanghai.
Hence, S&P Global Commodities at Sea expected some congestion in the southern Chinese ports as well, as many vessels are trying to find alternative ports from Shanghai and the northern Chinese ports.