Iron ore futures continued to chase toward the RMB 1,000/mt mark, on good steel demand and expectation of recovering economies from the pandemic.
Thus, the most-traded iron ore for May 2021 delivery on China’s Dalian Commodity Exchange (DCE) rose by 6.76% day-on-day or RMB 61.50 to 971/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange, also followed the rally and hiked up by 2.38% or RMB 94 day-on-day to RMB 4,040/mt.
Too much speculative trades
Despite the record-breaking bull run, some trade participants doubted the rally, and believed that the market was over-inflated with speculative trading after the influx of ‘hot money’.
These injections of funds came from loose monetary policies set by Beijing policymakers in trying to kickstart the coronavirus-hit economy.
However, there was also some market concerns over tighter iron ore supply for next year, in view of rainy seasons, political tension and recovering global steel demand due to the new vaccines.
Nevertheless, the DCE decided to rein in the market by the start of next week, with the adjustment for speculative margin requirements for May iron ore futures and limit non-futures members’ single-day open positions.
More buying interests for low grade fines
Buying interests for low grade fines started to gain tractions, as some end-users found that iron ore prices were too high recently and ate into their margins.
Thus, there was some renewed buying interests for low grade fines like Super Special fines and Indian fines, as some mills with flexible configurations, switched to combination of low grade and high-grade ores in the blast furnace mix.
However, most of the buying interests were still focused on the medium grade fines like PBF, and the higher grade ores like the BRBF, amid high steel margins.