Chinese futures rebounded from recent corrections after a late rally seen in the afternoon session, prompted by a flurry of trades done at higher levels.
Thus, the most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), for September delivery, jumped by 2.05% day-on-day to RMB 771 per tonne on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange then rose slightly 0.17% on-day to RMB 3,620 per tonne.
Low and mid-grades on the focus
Market participants continued to favor mid-grade and low-grade fines purchases in view of narrowing steel margins.
For instance, most of the trades done yesterday over the platforms consisted of Pilbara Blend fines which accounted nearly 430,000 mt, while other low grades like SSF and Yandi fines also were transacted, whereas there was only one trade of Brazilian Carajas fines at 290,000 mt.
The popularity of high grade like Carajas fines seemed to have waned among buyers, due to high prices and narrowing steel margins.
China steel output rises in May amid global slump
Global crude steel production fell for the third consecutive months in May, except for China, according to provisional figures from World Steel Association (WSA).
China’s production saw a rise of 4.2% on-year to 92.27 million mt in May, which was against the declining global output estimated at 148.78 million mt, down 8.7% on-year.
The spike in Chinese steel production were credited to public works investment and the manufacturing sector that recovered under government stimulus measures.
Outside China, most of the countries’ steel output were reduced due to coronavirus lockdown measures, as such Indian production went down by 39.1% on-year to 5.77 million mt, while Japanese output plunged 31.8% on-year to 5.92 million mt in May.