Iron ore futures continued to rise for the second consecutive day after the long holidays as trade participants remained bullish on steel demand.
The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE), for September delivery then rallied up by 6.37% day-on-day or up RMB 73.50 to RMB 1,226.50/mt on Friday.
The steel rebar contract on the Shanghai Futures Exchange, also rose by 1.14% or up RMB 64 day-on-day to RMB 5,678/mt.
Lower port stockpiles during holidays period
China’s iron ore port stockpiles went down slightly by 0.5% on-week to 129.6 million mt during the May 1-5 period, amid high steel consumption and raw material demand.
However, the Chinese mills’ steel stocks grew higher weekly due to slower discharge rate during the long holiday period, according to Mysteel.
Thus, the mills’ total finished steel products stockpile recorded 6.49 million mt for rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plates, up 0.7% on-week, marking the first gain in ten weeks.
Despite the high stockpiles, domestic rebar prices reached a record-high at RMB 5,489/mt, up RMB 234/mt on day, as of May 6, indicating that construction steel demand was still robust in China and further price upticks are expected in near term.
China’s iron ore import drops in April amid bad weather
China imported 98.57 million mt of iron ore in April 2021, down 3.5% on-month, though up 2.9% on-year, according to country’s General Administration of Customs.
The lower imports were traced to cyclone season in Western Australia that disrupted shipments, while Brazilian shipments were also affected by rainy season.
Despite the lower monthly imports, most market participants expected higher imports during Q2 with better weather conditions, though some trade participants were concerned about worsening bilateral relations between Australia and China that might limit the iron ore trade.