Chinese futures remained almost flat for Wednesday, till a selldown in the afternoon session that led to a negative closing.
The most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), for September delivery, went down slightly by RMB 2.00 or 0.27% day-on-day at RMB 742 per tonne on Wednesday.
Similarly, the steel rebar contract on the Shanghai Futures Exchange also slipped slightly down by RMB 2 or 0.06% at RMB 3,566 per tonne.
High China’s PMI that beat expectation
Despite the flat movement in DCE, China’s gradual recovery from the coronavirus-hit economy got a boost from its high PMIs ratings in June.
For June, China’s Caixin/Markit PMI reached 51.2 reading, a six-months high since Dec 2019, and beating market expectation of 50.5 readings as well as higher than May’s rating at 50.7.
According to trade sources, new manufacturing orders expanded for the first time since January 2020, due to the gradual easing of lockdown measures that made production recovery possible.
So far, China’s private PMI was in-line with the official PMI readings at 50.9 for June, indicating that the economy is at expansionary mode, based on data from the National Bureau of Statistics.
China mills increase lump and pellet usage
Chinese mills were heard to be increasing their usage of lump and pellet in their blast furnaces mix due to competitive prices.
According to trade sources, they are likely to procure the materials from dockside stocks as around 20% of the port inventory consisted of lump and pellet, much higher than usual levels.
Besides these, the end-users were also heard to be chasing for Australian mainstream mid-grade ores such as PBF, Mac fines, Newman high grade fines due to supply tightness among port inventory.