Iron ore futures managed to eke out a gain by the end of Wednesday day session, after a choppy market under selling pressure.
The futures of Dalian Commodity Exchange (DCE) then inched up by 0.07% day-on-day or RMB 0.50 to RMB 747/mt, after a late rally to rebound from losses, during the day trading session on Wednesday.
The rebar futures, however, went down by 0.94% day-on-day or RMB 52 to RMB 5,452/mt, during the day trading session.
More profit takings and supplies ahead
Some market participants expected that there would be more profit-taking in the paper market after the rally seen yesterday, as market sentiments remained bearish over the ongoing steel cuts.
There were also more supplies of iron ore among port inventories that piled up to the high 131 million mt level, and many participants expected more iron ore arrivals from Brazilian miners as they increased production and exports.
Meanwhile, the recent lower iron prices had increased Chinese blast furnace steel mills’ profitability in August, with an average margin of RMB 408/mt from rebar sales, up 37% as compared to an average margin of RMB 297/mt for July.
Mills to increase usage of high grade fines
More Chinese mills were turning their attention to high grade fines, in view of higher coke prices, which showed no signs of easing.
So far, the Chinese met coke prices were expected to undergo a tenth straight price hikes by another RMB 120-200/mt till early next week, and mills are to absorb the higher coke input prices.
Thus, mills were heard in trying to reduce the expensive coke usage and increase the usage of medium to high grade iron ore products for blast furnace mix.