Iron ore futures rebounded on Thursday over higher buying interests for limited mainstream Australian fines.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange then rose slightly by 0.85% or RMB 7.00 day-on-day to RMB 826.50 per tonne on Thursday.
On the contrary, the Shanghai Futures Exchange stayed rather flattish before dipping slightly by 0.08% or RMB 3 day-on-day to RMB 3,791 per tonne.
More speculative buying for Australian medium grades
Due to the supply tightness of medium grade ores among Chinese ports, some buyers engaged in aggressive speculative buying activities for available mainstream Australian fines that they can find.
Some buyers, however, were seeking for low grade Indian fines too due to their discounts against Australian fines.
Meanwhile, there was some market concerns over port congestion in China with high numbers of vessels waiting to unload.
However, the long vessels queue is expected to ease by the end of August with the passing of rainy season and improvement in coronavirus pandemic situations.
Higher India’s steel utilization rates in July
Outside of China, Indian steel demand had also risen to higher levels with more utilization from its steelmakers.
As such, India’s JSW Steel had raised its steel capacity utilization in July, up 83% month-on-month as the country’s economy recovered gradually from coronavirus pandemic.
The high utilization rates had increased flat steel output by 17% on monthly basis as Indian mills have more incentives to produce due to higher steel prices.
For instance, the prices of hot-rolled coil (HRC) and cold-rolled coil (CRC) were raised twice in July by around INR 500-750/mt or $6.70 – $10/mt in early July then later by INR 500-1,000/mt or $6.70 – $13.40/mt around mid-July respectively.
Moreover, India’s vehicle production also rose in July to a total of 1.72 million units, up 57.8% month-on-month, which led to higher finished steel consumption in July at 6.08 million mt, up 10.9% from June.