Iron ore futures extended its upward climb on market optimism on better Chinese steel consumption.
The futures of Dalian Commodity Exchange (DCE) for May delivery rose by 6.83% day-on-day or up RMB 51 to RMB 797.50/mt, during the day trading session on Thursday.
The rebar futures also rose slightly by 0.62% or up RMB 30 day-on-day to RMB 4,880/mt, during the day trading session.
Low crude steel production expected in March
Despite bullish market sentiments on steel demand, China’s crude steel production is likely to remain low in March 2022 as compared to corresponding period last year.
This was due to slower construction activities on the ongoing property projects, while there was relatively lower number of new projects coming online this year, as many property developers faced tight cash flows to fund new projects.
Therefore, major steelmaking hubs like Tangshan and Handan city were expected to extend some steel output cuts throughout March, though output restrictions had been relaxed after the Winter Olympics ended in late February.
More demand for lump amid Russia-Ukraine conflict
The lump demand is expected to gain from the ongoing Russia-Ukraine conflict, as end-users tried to divert pellets supply away from the military-contested regions.
Hence, more European mills were seeking for Indian pellets, especially for those with low-alumina contents and were willing to pay high prices for them.
Meanwhile, Chinese trade participants are expected to increase the lump usage in their blast furnace ratio as direct feeds, amid supply tightness of lump in the country.