Iron ore futures continued its record-breaking surge on good steel demand and market optimism on economic recovery from the pandemic.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange then rallied by 3.43% or RMB 31 day-on-day to RMB 934/mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange, also rose slightly to 0.54% or RMB 21 day-on-day to $3,913/mt.
Market optimism on steel demand
The strong Chinese steel demand had pushed benchmark iron ore prices over the $130/mt to a six-year high level.
The price upticks were attributed to the high steel margins as well as declining port stockpiles of iron ores recorded at 130.3 million mt for the week ended at Nov 27, based on Steelhome data.
Some market participants expect more restocking activities for the Chinese end-users ahead as they replenished inventories for the new year.
High daily crude output in November
China’s daily crude steel output continued to grow at end-November, amid good steel demand in the country.
According to Mysteel, the daily crude steel production reached an average of 2.97 million mt over the Nov 21-30 period, up 1% from previous 10-day period.
Despite the high output rates, the rebar prices continued to drop as the HRB400 20mm dia rebar dropped RMB 20/mt on-day to RMB 4,079/mt, as of December 1.
This was due to colder weather in northern China that lowered rebar consumption from lesser construction activities.