Daily DCE Review 6/5/21

Iron ore futures rallied as trade participants returned from the long holidays amid high steel prices and margins.

The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE), for September delivery then surged up by 6.81% day-on-day or up RMB 75.50 to RMB 1,184/mt on Thursday.

The steel rebar contract on the Shanghai Futures Exchange, also rose by 4.56% or up RMB 247 day-on-day to RMB 5,665/mt.

 

Iron ore trade unaffected by trade spat between China and Australia    

The iron ore paper rally went ahead despite political risks as relations soured between China and Australia after the suspension of economic dialogue on Thursday.

However, the worsening bilateral strains seemed to not to have any impact on iron ore trading between the two countries, which Australia reportedly exported iron ores worth a total of $115 billion for the fiscal year ended in March 2021.

Meanwhile, the Australian coking coal exports were affected by trade spat with Chinese unofficial ban on Australian-origin coal that led Chinese trade participants to seek for non-Australian coals in the spot market since late 2020.

 

Steel prices face short term corrections, according to Mysteel

Chinese steel prices may undergo a round of corrections despite the robust steel demand and high margins, according to Mysteel.

The consultancy firm stated that the recent run of high steel prices was supported by “better-than-expected macro-economic”. However, some end-users found that the prices had risen too high and thus more cautious on future procurement.

Meanwhile, more iron ore shipments were expected to arrive from suppliers in Australia and Brazil on better weather conditions that eased supply tightness, while the wet weather approaching in China during June might decrease the steel demand in the southern provinces.

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