Iron ore futures rallied on Tuesday, after market talks of using less coke in the blast furnace mix which might increase the usage of high grade fines.
The futures of Dalian Commodity Exchange (DCE) then jumped by 1.06% day-on-day or RMB 8 to RMB 763/mt, during the day trading session on Tuesday.
The rebar futures also went up by 1.23% day-on-day or RMB 67 to RMB 5,494/mt, during the day trading session.
Extending steel output cuts and high Brazilian shipments
Despite the market clatter of using more high grade fines, but iron ore demand remained low in view of Beijing’s accelerating effort to cut steel production.
So far, the ongoing output restriction had extended to Shandong, Guangxi, Xinjiang and Sichuan provinces as well as the recent output cuts in the city of Handan, Hebei, as evident of Beijing policymakers’ push to reduce carbon emissions.
In the meantime, Brazilian iron ore exports reached an 11-month high in August, at 34.8 million mt, up 11.7% on-year, based on Brazil’s Ministry of Industry, Foreign Trade and Services.
The high exports volume was due to the catch-up of Brazilian miners’ production to meet their annual guidance by year-end. As many shipments were expected for arrival in China, which might cause some corrections in iron ore prices.
Higher steel exports from China despite restrictive policy
China’s customs recorded finished steel exports to grow by 31.6% on-year to 48.1 million mt over the Jan-Aug 2021 period, while steel imports declined on yearly basis by 22% to 9.5 million mt.
The high steel export volume was opposed to Chinese authority’s plan for reducing steel exports and increasing steel imports to reduce steel productions, despite introducing of tax policies to deter exports and encourage imports.
Meanwhile, China’s iron ore imports had decreased by 1.7% on-year to 746.5 million mt over the Jan-Aug 2021 period, due to the prolonged steel production curbs, according to the country’s General Administration (GACC) of Customs.