Iron ore futures gained further on lower steel stocks, though there was some recovery from previous lows, being backed by higher production.
The futures of Dalian Commodity Exchange (DCE) for January delivery then hiked up by 1.41% day-on-day or up RMB 10 to RMB 719/mt, during the day trading session on Friday.
The rebar futures also went up by 1.23% day-on-day or up RMB 55 to RMB 4,526/mt, during the day trading session.
Steel stocks gain from better steel production
China-based mills’ steel stocks had recovered from previous lows and were replenished at a higher rate with better steel production, according to Mysteel.
Hence, the steel inventories of steel products like rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate went up by 1.3% week-on-week to 4.26 million mt as of Jan 5, based on Mysteel data.
The retail steel stocks also hiked up after almost three-months of inventory drop and reached 13.7 million mt, up slightly by 0.7% on-week during Dec 31- Jan 6, as production increased from relaxed output restriction during late December.
Higher blast furnace capacity recorded in early Jan
Chinese mills’ blast furnace capacity utilization rate climbed higher for the third consecutive week during Dec 31- Jan 6 period, according to Mysteel.
Based on the survey data, blast furnace capacity utilization rate went up by 2.1% weekly to 77.89% as of Jan 6, due to more blast furnaces resuming operation among northeastern China-based mills.
Some trade sources also stated that there was some easing to the production restrictions, especially for mills that complied with environmental regulations and low emission standards.