Iron ore futures ended the week on high notes, despite some selloff in the morning session, but only to rally later at the afternoon session.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) then rose by 2.35% on-day or RMB 24.50 to RMB 1,067.50/mt on Friday.
The steel rebar contract on the Shanghai Futures Exchange also went up higher by 1.72% or RMB 76 day on-day to RMB 4,487/mt.
Better restocking activities amid uncertainty in rising coronavirus cases
Restocking activities had picked up pace, due to strong pre-Lunar New Year demand, as trade participants focused purchases on medium-to-high grade fines.
Due to the rising coronavirus cases in the steel-making hub of Hebei province, some trade participants preferred to snap up cargoes first, before the Chinese authorities imposed more stringent measures to contain the spread.
Other trade participants were less worried about resurgence of Covid 19 cases in the Hebei, which reportedly had minimum impact on steel production.
Though, the truck transportation may experience more delays from the stricter checks and testing of truck drivers accessing the port areas to pick up cargoes.
Higher steel stocks on lower steel consumption
Despite the rally in the iron ore futures, China’s steel stocks rose during the Dec 31-Jan 6 period, due to slower steel consumption, according to Mysteel.
The steel consultancy firm recorded steel mills’ inventories at 5.4 million tonnes for steel products consisting of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate, up 3.2% on-week during the Dec 31-Jan 6 period.
In the meantime, the steel stocks among traders also rose by 6.4% on-week to 14 million mt as of Jan 7, based on Mysteel’s survey.
Apparently, the freezing winter had caused some suspension of construction activities in northern China, while the rising coronavirus cases in Hebei had led to some disruption in the transportation of finished steel products.