Iron ore futures rallied on high steel margins and prices, after a strong opening at the start before moving flattish at the closing afternoon session.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange then hiked up by 2.45 % or RMB 21 day-on-day to RMB 876.50/mt on Thursday.
The steel rebar contract on the Shanghai Futures Exchange then booked a slight gain of 0.87% or RMB 34 day-on-day to $3,940/mt.
Rebar prices at one year high
The price of HRB400 20mm dia rebar continued to increase for the second consecutive day by RMB 15/mt on-day to RMB 4,139/mt as of Nov 18, almost at a one-year high.
The higher rebar margins and prices provided more incentive for mills to produce more, as construction firms tried to catch up their construction activities before the winter period.
Thus, Chinese rebar production went up by 1.5% on month and 6.5% on-year to 23.8 million mt in October.
Going forward, some market participants expected some price correction in near term with colder weather conditions in North China that affected construction activities.
More restocking demand
Chinese mills normally restocked iron ore during the second half of November ahead of the winter season in China.
This year was no different as buyers were rushing to procure January spot cargoes with preference for mid-grade fines, due to their cost efficiency as compared to low-high grade combination.
Thus, the low-grade fines like Yandi fines were losing their popularity among buyers as well as other low-grade brands like Super Special fines and Fortescue Blend Fines.